Battery storage

Authors: Karolina Popadziuk, Rhea Kapoor, Ahsaan Khan Niazi, March 2025   

1      Description and History

Battery storage systems play a crucial role in modern society by converting chemical energy into electricity on demand. From powering everyday electronics to stabilizing electrical grids, these systems are essential for a wide range of applications. With the increasing reliance on intermittent renewable energy sources such as solar and wind, effective energy storage has become more important than ever to ensure grid reliability and support decarbonization efforts.²

A battery energy storage system (BESS) consists of electrochemical cells, along with power electronics and control mechanisms, that store excess energy and release it when needed. This ability to balance supply and demand makes batteries indispensable in both small-scale and large-scale energy applications. This paper provides an in-depth examination of battery technology, including its fundamental components, historical development, and current applications. It explores the major battery types in use today, evaluates advancements in performance and cost, and highlights the growing role of batteries in various industries. Additionally, it analyses the current state of leading battery technologies, particularly lead-acid and lithium-ion, discussing their advantages, limitations, and recent developments based on the latest research.                                                           

1.1 Battery Storage Overview

A battery is an electrochemical device composed of one or more cells that store energy in chemical form and convert it into electricity through reversible redox reactions. Each cell contains two electrodes, an anode and a cathode, separated by an electrolyte that allows ionic movement while preventing electron flow. During discharge, chemical reactions at the electrodes generate a flow of electrons through an external circuit, producing power. In rechargeable, or secondary, batteries, applying an external current reverses these reactions, allowing the cell to be recharged. To achieve higher voltage and capacity, multiple cells are combined into modules and packs, making them suitable for a wide range of applications. ³

Beyond the electrochemical cells themselves, a complete battery energy storage system includes several key components that ensure safe and efficient operation. A Battery Management System (BMS) continuously monitors cell voltages, temperatures, and state-of-charge to prevent overcharging and deep discharge, which can damage the battery and reduce its lifespan. The power conversion system, which includes inverters and converters, manages the interface between direct current (DC) and alternating current (AC) power, controlling charging rates to optimize efficiency. Thermal management systems regulate the temperature of the battery cells, ensuring they operate within an optimal range to prevent overheating or reduced performance. Protective circuitry, including fuses, breakers, and sensors, provides additional safeguards against potential faults or thermal runaway, which can lead to safety hazards.⁴

Several key performance factors determine the effectiveness of a battery energy storage system, including energy capacity, power output, energy density, efficiency, and lifespan. Energy capacity, typically measured in kilowatt-hours, indicates how much energy the system can store, while power output, measured in kilowatts, determines the maximum rate at which the stored energy can be delivered. Energy density, expressed in watt-hours per kilogram or litre, is an important metric for applications where weight and space constraints are critical. Round-trip efficiency refers to the percentage of input energy that can be retrieved during discharge, while cycle life measures how many charge-discharge cycles a battery can undergo before its performance degrades significantly. Modern battery storage systems can respond to changes in electricity demand within milliseconds, making them not only effective for energy storage but also valuable for applications such as frequency regulation and grid stabilization.^3,4                               

1.2 Technology History 

The history of battery technology spans more than two centuries of continuous innovation .⁵ The first practical battery, the Voltaic Pile, was invented by Alessandro Volta in 1800. This early device demonstrated that stacking alternating layers of zinc and copper, separated by brine-soaked cloth, could generate a steady electric current. Shortly afterward, the Daniell cell, developed in 1836, improved upon Volta’s design by using separate copper and zinc electrodes in different electrolytes, producing a more stable voltage that made it useful for early telegraph systems.

One of the most significant breakthroughs in rechargeable battery technology came in 1859 when Gaston Planté developed the lead-acid battery. This innovation introduced the ability to reverse the chemical reactions within a battery by applying an external current, allowing it to be recharged multiple times. Planté’s design used lead and lead dioxide electrodes submerged in sulfuric acid, making it the first practical secondary battery. This rechargeable capability laid the foundation for modern energy storage systems and led to widespread adoption in applications requiring reliable backup power. By the late 19th century, additional rechargeable battery technologies emerged, including the nickel-cadmium (Ni-Cd) battery, introduced by Waldemar Jungner in 1899, and the nickel-iron battery, developed by Thomas Edison in the early 20th century. Although Edison’s nickel-iron battery was durable, its high weight and relatively low efficiency limited its adoption.⁵

Throughout the 20th century, battery technology advanced alongside developments in electrical and electronic applications. Lead-acid batteries became the standard for automotive ignition and backup power due to their reliability and relatively low cost, despite their modest energy density. Nickel-cadmium batteries gained popularity in the mid-20th century, particularly in portable electronics, because of their ability to deliver high currents and withstand numerous charge-discharge cycles. However, Ni-Cd batteries suffered from the “memory effect,” which caused voltage depression with partial discharges, and the presence of toxic cadmium raised environmental concerns. In response to these challenges, the nickel-metal hydride (Ni-MH) battery was developed in the 1980s as a safer alternative. Instead of cadmium, Ni-MH batteries used a hydrogen-absorbing alloy, offering higher energy density and eliminating toxic heavy metals. The first commercial applications of Ni-MH batteries included consumer electronics and hybrid electric vehicles, such as the Toyota Prius, which debuted in 1997 with a Ni-MH battery pack.⁴

The most significant revolution in battery technology came with the development of lithium-ion (Li-ion) batteries in the 1970s and 1980s. Key researchers such as M. Stanley Whittingham, John Goodenough, and Akira Yoshino played a crucial role in advancing lithium-ion chemistry, leading to Sony’s commercial launch of the first Li-ion battery in 1991. ⁶Unlike previous battery chemistries, Li-ion batteries offered significantly higher voltage, around 3.6 volts per cell, and superior energy density, making them ideal for portable electronics, mobile devices, and later, electric vehicles. The impact of lithium-ion technology was profound, enabling the rapid growth of mobile computing and electric transportation. In recognition of their contributions, Whittingham, Goodenough, and Yoshino were awarded the Nobel Prize in Chemistry in 2019.

By the late 20th and early 21st century, battery technology expanded beyond consumer electronics and automotive applications to include large-scale energy storage. High-temperature sodium-sulphur (Na-S) batteries, first developed in the 1960s, emerged as an option for utility-scale storage due to their high energy content, while NASA’s development of redox flow batteries in the 1970s introduced a system that stored energy in liquid electrolytes, making them suitable for grid-scale applications.⁷ Continuous improvements in battery lifetime, energy capacity, and safety have driven further advancements, leading to a diverse landscape of battery technologies that continue to evolve to meet the growing demand for energy storage.

In summary, battery technology has progressed from Volta’s primitive stack of metal discs to a highly specialized and diverse field, encompassing multiple chemistries optimized for different applications. These developments have laid the foundation for the widespread use of batteries across modern industries and continue to shape the future of energy storage.

1.3 Types of Batteries

Various rechargeable battery chemistries have been developed to meet different energy storage needs. Each type has distinct materials, performance characteristics, and applications. The most used today include lead-acid, nickel-based, lithium-ion, sodium-sulphur, and redox flow batteries.

Lead-Acid Batteries: Invented in 1859, lead-acid batteries remain widely used due to their low cost, reliability, and well-established recycling infrastructure. They operate using a lead dioxide cathode, a spongy lead anode, and a sulfuric acid electrolyte. Though their energy density is relatively low (30–40 Wh/kg), they deliver high surge currents, making them ideal for vehicle starters, backup power, and stationary storage.⁸

However, lead-acid batteries are bulky, heavy, and have a limited cycle life, especially under deep discharge conditions. Modern sealed versions, such as valve-regulated lead-acid (VRLA) batteries, reduce maintenance requirements, while advancements like carbon additives have improved performance. Despite these refinements, lead-acid batteries remain best suited for applications where weight and volume are not primary concerns.⁹

Nickel-Based Batteries (Ni-Cd and Ni-MH): Nickel-based batteries include nickel-cadmium (Ni-Cd) and nickel-metal hydride (Ni-MH). Ni-Cd batteries, developed in 1899, were widely used in power tools and emergency lighting due to their durability and ability to tolerate deep discharges. However, concerns over cadmium toxicity and the “memory effect” led to their decline, with use now mostly limited to industrial and aviation applications.¹⁰

Ni-MH batteries, introduced in the 1980s, improved upon Ni-Cd by replacing cadmium with a hydrogen-absorbing alloy, increasing energy density (60–100 Wh/kg) while eliminating toxic materials. They became popular in rechargeable consumer batteries and early hybrid vehicles, such as the Toyota Prius. Although safer and longer-lasting than Ni-Cd, Ni-MH batteries suffer from high self-discharge and have largely been replaced by lithium-ion technology in most applications .⁶

Lithium-Ion Batteries: Lithium-ion (Li-ion) batteries dominate modern rechargeable storage due to their high energy density (150–250 Wh/kg), efficiency (>90%), and long cycle life (IEA, 2024). Comprising a graphite anode, lithium metal oxide cathode, and lithium salt electrolyte, they offer superior performance over lead-acid and nickel-based chemistries.

Since their commercialization in 1991, Li-ion batteries have become the preferred choice for electric vehicles, portable electronics, and grid storage. Costs have plummeted—by approximately 90% from 2010 to 2023—making them increasingly viable for widespread use (IEA, 2024)¹¹. However, challenges remain, including the risk of thermal runaway, reliance on scarce materials like cobalt and lithium, and the need for improved recycling solutions. Research is actively exploring alternatives, including sodium-ion and solid-state lithium batteries, to enhance safety, sustainability, and performance.¹²

Sodium-Sulphur (Na-S) Batteries: Sodium-sulphur batteries operate at high temperatures (~300°C) using molten sodium and sulphur electrodes with a solid beta-alumina ceramic electrolyte. They offer high energy density (150–240 Wh/kg) and efficiency (75–90%), making them suitable for long-duration energy storage, particularly in grid applications.¹³

Initially commercialized in Japan, Na-S batteries have been deployed at large scales to stabilize wind power generation. Their low-cost materials are an advantage, but the need for high operating temperatures and concerns over potential exothermic reactions pose challenges. Ongoing advancements aim to improve their safety and operational flexibility for broader adoption.¹³

Redox Flow Batteries: Redox flow batteries store energy in liquid electrolytes held in external tanks, enabling independent scaling of energy and power capacity. During operation, electrolytes circulate through a membrane-separated cell stack, where electrochemical reactions store or release energy.⁹

These batteries have long service lives and tolerate deep discharges without degradation, making them well-suited for grid storage applications requiring extended-duration energy supply. However, their energy density is low (~20 Wh/kg), and the systems are complex, involving pumps, membranes, and large electrolyte tanks. Research is focused on improving efficiency and reducing costs to make them more competitive for widespread deployment.¹⁴

2      Economic Performance

2.1 Advancements in Battery Performance and Cost

Battery storage technology has made significant strides in both performance and affordability. Early batteries of the 19th century stored only small amounts of energy and were often impractical outside laboratories. Decades of research and engineering have steadily improved key metrics, enabling modern batteries to store more energy, operate more efficiently, last longer, and cost significantly less.

One of the most noticeable advancements has been in energy density—how much energy a battery can store relative to its weight or volume. A century ago, lead-acid batteries stored only a few dozen watt-hours per kilogram. Nickel-based chemistries roughly doubled that, but the real breakthrough came with lithium-ion technology, which increased energy density several times over. Today’s Li-ion cells typically achieve 150–250 Wh/kg, more than five times the capacity of early 20th-century batteries.¹⁵ This increase has enabled the rise of compact, high-powered applications, from smartphones and laptops to long-range electric vehicles, while also allowing stationary storage systems to be smaller and more efficient.

Battery efficiency has also improved over time. Rechargeable batteries have generally been efficient, but modern materials and designs have pushed performance even further. Traditional lead-acid and nickel-cadmium (Ni-Cd) batteries had round-trip efficiencies of around 70–85%, meaning a portion of energy was lost in charging and discharging. Lithium-ion batteries now routinely exceed 90% efficiency, minimizing energy waste and making them particularly valuable for electric vehicles and grid storage.¹⁵ Even flow batteries, which initially struggled with efficiencies around 50–60% due to losses in pumps and voltage, have improved to approximately 75% in newer designs. High efficiency is especially important in large-scale energy storage, where even small percentage gains can translate to significant cost savings and operational improvements.

One of the most dramatic developments has been the sharp decline in battery costs. Historically, batteries were prohibitively expensive, with early Li-ion cells in the 1990s costing hundreds of dollars per kilowatt-hour. By the early 2010s, battery costs for electric vehicles still exceeded $500/kWh. However, mass production, economies of scale, and advancements in materials and manufacturing have driven prices down at an unprecedented rate. Between 2010 and 2023, the cost of lithium-ion battery packs fell by approximately 90%, making electric vehicles and grid storage far more economically viable ¹⁶. Studies tracking this trend, such as those by Ziegler et al.¹⁷ and BloombergNEF¹⁸, attribute the cost reductions to improvements in manufacturing techniques, the rise of large-scale battery factories, growing demand, and better material efficiency. Other chemistries, such as lead-acid, have also benefited from industrial scaling and mature recycling processes, helping to keep costs low. Further research aims to continue this downward trajectory by replacing costly materials like cobalt and nickel with more abundant alternatives, ultimately making battery storage even more accessible. ¹⁹

Scalability has also been a major focus of battery development. Early applications involved only a few small cells used in telegraph systems or laboratory experiments, but today’s battery installations can provide power at the scale of entire power plants. Advances in system design, such as modular pack structures and sophisticated battery management systems (BMS), allow batteries to be assembled in parallel to meet large-scale energy demands. Over the past decade, grid battery projects have expanded from pilot installations of just a few megawatts to large-scale deployments exceeding 100 MW as costs have fallen and confidence in the technology has grown.¹⁵ At the same time, global manufacturing capacity has scaled up, with gigafactories producing batteries at terawatt-hour levels to meet soaring demand for electric vehicles and energy storage.

Battery lifespan and durability have also seen major improvements. In the 1980s, most rechargeable batteries lasted only a few hundred cycles before degrading. Today, advanced lithium-ion chemistries can withstand thousands of cycles with minimal capacity loss. Some lithium iron phosphate (LFP) batteries, for instance, can exceed 5000 cycles, equating to over a decade of daily use with little degradation ^17,20. Advances in electrolyte formulations, improved electrode coatings, and better separators have helped mitigate common aging mechanisms such as dendrite growth and unwanted side reactions ¹⁷. Even lead-acid batteries, despite their limitations, have seen lifespan improvements through innovations like carbon additives and new plate designs. Extending battery lifespan is critical for economic viability, as longer-lasting batteries reduce replacement costs and improve overall system efficiency, particularly in applications like grid storage that require daily cycling.

Overall, the trajectory of battery technology has been one of continuous improvement—enhancing energy storage capacity, efficiency, lifespan, and scalability while dramatically reducing costs. As noted by Dunn, Kamath, and Tarascon²⁰, the diversity of battery technologies offers a “battery of choices” suited for different applications, with each chemistry finding its niche as performance improves. Ongoing research and development are expected to push these advancements even further, making batteries even more energy-dense, efficient, and cost-effective. These improvements have not only expanded the role of batteries across industries but have also paved the way for their increasing adoption in larger and more critical energy applications, as will be explored in the next section.             

2.2 Growth of Battery Usage Across Different Sectors

The rapid improvement in battery performance and affordability has led to widespread adoption across multiple industries. Key areas driving battery expansion include renewable energy integration, electric transportation, industrial and commercial applications, and grid-scale storage. While these sectors often overlap, each has distinct contributions to the growing role of batteries in modern energy systems.

One of the most critical uses of battery storage today is supporting renewable energy sources like solar and wind. Since these energy sources are intermittent, batteries help smooth fluctuations, store excess generation, and shift energy to periods of higher demand. For instance, solar farms use batteries to store surplus midday energy and discharge it in the evening, while wind farms use them to stabilize power output. By enhancing grid stability, batteries enable higher renewable penetration without compromising reliability.¹² They also provide fast frequency response, quickly injecting power when sudden drops in solar or wind output occur. Large-scale lithium-ion storage projects have been deployed globally for these purposes, including the Hornsdale Power Reserve in Australia, a 100 MW/129 MWh battery that helps balance wind generation and regulate frequency. Pairing batteries with renewables reduces reliance on fossil-fuel backup plants and facilitates a cleaner energy mix. As battery costs continue to decline, their adoption in residential, commercial, and utility-scale renewable systems is accelerating in support of global clean energy goals.

The transportation sector has been transformed by battery technology, particularly lithium-ion. Electric vehicles (EVs) rely on high-capacity Li-ion packs to achieve driving ranges of hundreds of kilometers per charge. The steady improvements in Li-ion energy density and cost have made EVs increasingly competitive with gasoline-powered cars. Initially, Li-ion batteries gained traction in consumer electronics, which paved the way for scaling up production for automobiles¹¹. Today, nearly every major automaker is investing heavily in EVs, fuelling unprecedented demand for batteries. Beyond cars, batteries are powering buses, trucks, ferries, and even experimental aircraft, demonstrating their growing role in all modes of transport. The rise of EVs is also driving further innovation, including advancements in energy density, fast charging, and battery lifespan. Additionally, retired EV batteries, which degrade to around 70–80% of their original capacity after years of use, are being repurposed for stationary energy storage, extending their usefulness before recycling.²¹ As transportation electrification accelerates, the demand for batteries continues to surge, driving further advancements in the sector.

Batteries are also increasingly used in industrial and commercial settings. In large buildings and factories, battery banks help manage electricity costs by storing energy during off-peak hours and discharging during expensive peak periods, a practice known as peak shaving. Many facilities also use batteries as uninterruptible power supplies (UPS) to prevent disruptions during outages, especially in critical infrastructure like data centres, hospitals, and telecom networks.²¹Traditionally, lead-acid batteries dominated these applications due to their reliability, but lithium-ion is now preferred for its higher efficiency, compact size, and lower maintenance requirements. In industrial equipment, battery-powered forklifts and warehouse vehicles have largely replaced internal combustion models, creating cleaner work environments. Off-grid applications are another growing area, with remote communities and microgrids using battery storage to reduce dependence on diesel generators and store solar energy for nighttime use. Many industries with on-site renewable generation also integrate batteries to maximize self-consumption and stabilize power supply. As battery technology advances and costs fall, more commercial and industrial users are expected to adopt energy storage to enhance resilience and cut costs .¹⁴

At the grid level, utilities and power operators are increasingly deploying large-scale battery storage to enhance grid performance and defer infrastructure upgrades. Grid-scale battery energy storage systems (BESS), often housed in containerized lithium-ion units, provide critical services such as frequency regulation, spinning reserves, and voltage support. In many markets, grid batteries generate revenue by rapidly balancing supply and demand, a function traditionally performed by fossil-fuel plants. Batteries are also being used to delay expensive grid expansions—rather than building new substations or transmission lines, utilities can install battery systems to handle peak demand spikes.¹⁵Additionally, batteries play a key role in black start services, helping restore power to sections of the grid after an outage by supplying initial energy to restart generators. As renewable energy targets rise worldwide, large-scale batteries are increasingly used for energy arbitrage—storing excess solar or wind power when generation exceeds demand and releasing it when needed. In 2023, battery storage was the fastest-growing power sector technology, with installed capacity more than doubling from the previous year (IEA, 2024)¹¹. What started as a niche experimental technology a decade ago has now become a mainstream grid resource. According to industry projections, grid battery capacity is expected to expand sixfold or more by 2030 as costs continue to decline and demand for flexible, fast-responding storage increases¹⁶.

These application areas are increasingly interconnected. Electric vehicles, for example, can act as mobile energy storage units. When integrated with the grid via smart charging or vehicle-to-grid (V2G) technology, fleets of EVs could collectively serve as a distributed battery resource. Similarly, residential solar systems paired with home batteries not only provide backup power but also reduce peak demand and, in some cases, feed electricity back into the grid. These overlapping trends highlight how batteries are central to the broader energy transition, enabling a more electrified and sustainable energy future. As demand across sectors drives further research, innovations in battery technology continue to push boundaries—whether through higher energy density for EVs, improved longevity for grid storage, or cost reductions that make energy storage more accessible worldwide.                        

2.3 Current Status and Future of Battery Technologies

Battery storage has evolved from simple electrochemical experiments in the 19th century to a cornerstone of modern energy systems. While several battery technologies exist today, two stand out for their widespread use and contrasting positions: lead-acid, a long-established and highly mature technology, and lithium-ion, a newer, rapidly advancing powerhouse. These two serve as benchmarks in the battery landscape, each with unique strengths and limitations. Alongside them, emerging and niche technologies continue to develop, offering specialized solutions where neither lead-acid nor lithium-ion is ideal.

Lead-Acid: Despite being one of the oldest rechargeable battery technologies, lead-acid remains widely used due to its low cost, reliability, and well-established manufacturing and recycling infrastructure. The materials—lead and sulfuric acid—are inexpensive, and nearly all components are recyclable, with global recycling rates exceeding 95% in many regions.²² Lead-acid batteries also perform well in cold temperatures and provide high burst power, making them ideal for vehicle starters, uninterruptible power supplies, and backup systems in areas where cost and simplicity are primary concerns.²³

However, lead-acid technology has significant drawbacks that limit its role in modern high-performance applications. Its low specific energy makes it heavy and bulky for the energy it stores, ruling it out for weight-sensitive applications like electric vehicles. Additionally, lead-acid batteries have a relatively short cycle life—deep discharges significantly degrade capacity, typically limiting them to around 500 full discharge cycles, far fewer than lithium-ion batteries .²⁴ Charging is also slow, as the current must taper off near full charge to avoid overcharging and hydrogen gas release, which requires proper ventilation. While maintenance-free designs exist, lead-acid batteries remain highly sensitive to operating conditions, with high temperatures or improper charging accelerating degradation. The environmental concerns surrounding lead usage, though mitigated by strong recycling practices, remain an issue in regions with inadequate disposal regulations.²⁴

To address some of these shortcomings, researchers have developed advanced lead-acid variants incorporating carbon additives to reduce sulfation and improve charge acceptance, as well as bipolar designs that reduce weight and internal resistance.²⁰ Despite these incremental improvements, lead-acid’s fundamental limitations—low energy density and weight—make it unlikely to compete with newer technologies for cutting-edge applications. Instead, it remains a cost-effective solution for stationery and backup power where energy-to-weight ratio is less critical.

Lithium-Ion: Lithium-ion (Li-ion) batteries have emerged as the premier energy storage technology across numerous applications. With energy densities typically ranging from 150–250 Wh/kg—more than five times that of lead-acid—Li-ion batteries are compact, lightweight, and highly efficient, with round-trip efficiencies often exceeding 90%.²⁴ Their ability to support high power output and fast charging has made them indispensable for electric vehicles, consumer electronics, and grid storage. Moreover, their cycle life has improved dramatically, with some advanced lithium chemistries, such as lithium iron phosphate (LFP), exceeding 5000 cycles, allowing them to last a decade or more in daily-use applications.²⁰

However, Li-ion technology comes with challenges. One of the most significant is safety—under certain conditions, Li-ion batteries can undergo thermal runaway, leading to overheating or even fires. This risk has been observed in consumer electronics, electric vehicles, and energy storage systems, prompting extensive safety measures, including advanced battery management systems and thermal regulation.¹⁸ Researchers are actively working on safer alternatives, including solid-state Li-ion batteries that replace flammable liquid electrolytes with solid materials, significantly reducing fire risk while potentially increasing energy density.⁶

Another challenge is the supply and cost of key materials like lithium, cobalt, and nickel. Demand for these elements is rapidly increasing, raising concerns about price volatility, supply chain vulnerabilities, and ethical sourcing—particularly in cobalt mining.^11,16 Efforts to mitigate these issues include the development of cobalt-free cathodes, such as LFP and high-manganese materials, as well as scaling up Li-ion battery recycling to recover valuable metals ¹¹. While Li-ion recycling infrastructure is still developing, new policies in regions like the EU and China are pushing for higher recovery rates to improve sustainability.

Despite these challenges, Li-ion technology continues to advance, with improvements in electrode materials, electrolyte formulations, and manufacturing processes enabling higher energy densities, longer lifespans, and lower costs. With economies of scale driving rapid cost reductions—Li-ion battery pack prices have fallen by approximately 90% since 2010—Li-ion remains the leading rechargeable battery technology for the foreseeable future, with incremental improvements continuously enhancing its capabilities¹¹.

Other Battery Technologies: While lead-acid and Li-ion dominate the battery market, other technologies serve specialized roles. Nickel-metal hydride (Ni-MH) batteries, once a leading alternative, have been largely replaced by Li-ion in most applications but persist in hybrid electric vehicles and select industrial uses. Sodium-sulphur (Na-S) batteries, primarily used in stationary storage, offer high energy density and long discharge durations but require high operating temperatures and improved safety measures to gain broader adoption. Redox flow batteries, such as vanadium flow systems, provide long-duration energy storage for grid applications, though high costs and system complexity remain barriers to widespread use.¹⁴

Other emerging chemistries, such as zinc-air, sodium-ion, and lithium-sulphur, are being actively researched to address cost, safety, and resource limitations associated with current technologies. For example, sodium-ion batteries—using abundant sodium instead of lithium—are gaining attention as a potentially lower-cost alternative for stationary storage and lower-performance applications. Similarly, solid-state lithium batteries promise to deliver significantly higher energy density and improved safety, though commercial viability is still a few years away.⁶

2.4 Expanding Role of Batteries in the Energy Transition

Batteries have evolved from niche scientific curiosities to indispensable components of modern energy infrastructure. Advances in energy density, efficiency, lifespan, and cost have propelled their adoption across a wide range of applications, from portable electronics to electric vehicles and large-scale grid storage.

Lead-acid and Li-ion batteries illustrate two ends of the technology spectrum—one a proven, low-cost workhorse still widely used in basic applications, and the other a high-performance, rapidly advancing technology that is reshaping energy storage. While lead-acid remains relevant in certain stationery and backup power applications, Li-ion continues to dominate, with ongoing research refining its performance, safety, and sustainability.

The broader battery landscape is also diversifying. Grid-scale storage is becoming increasingly critical for integrating renewable energy, stabilizing electricity networks, and reducing reliance on fossil fuels. Electric transportation continues to drive battery demand and technological advancements, pushing for higher energy densities, faster charging, and longer lifespans. At the same time, the development of second-life battery applications and improved recycling methods is addressing sustainability concerns, ensuring that battery storage remains a viable long-term solution.

As we move toward a low-carbon future, battery technology will remain a cornerstone of the energy transition. Continuous innovation, driven by the need for cleaner, more efficient, and more affordable energy storage, is expected to push the boundaries of what batteries can achieve. Just as past breakthroughs have shaped the present landscape, today’s advancements will define the future of energy storage, making batteries even more integral to a sustainable and electrified world.

3      Ecological Performance

3.1 General environmental goal of battery storage and its implementation

In addition to all potential economic benefits, one of the main goals of the battery storage development is to reduce society’s negative impact on the environment while satisfying all needs of current civilizations. As always, there are some drawbacks of this technology that are used as counterarguments to either stop battery storage development or to replace it with alternatives. However, renewable energy is the way to combat climate change and reduce greenhouse gas emissions. Battery storage seems to be the crucial part of this relatively new energy system.

The impact of BESS (Battery Energy Storage Systems) on achieving sustainable development goals needs further research. It is a complex study which shall examine the impact at every stage of the battery lifetime to evaluate the emissions associated with battery production, use, and disposal.

A good reference point for environmental assessment is the 2030 Agenda for Sustainable Development, adopted by all United Nations (an intergovernmental organization that aims for “peace and prosperity for people and the planet”) members in 2015, where 17 Sustainable Development Goals (SDGs) were established.²⁵ The goals related to society, economy and environment are interconnected. Mostly environment-focused are:

Goal 13: Take urgent action to combat climate change and its impacts, Goal 14. Conserve and sustainably use the oceans, seas and marine resources for sustainable development,

Goal 15. Protect, restore and promote sustainable use of terrestrial ecosystems, sustainably manage forests, combat desertification, and halt and reverse land degradation and halt biodiversity loss.²⁶

 Overall, BESS can significantly support achieving SDGs, with evidence indicating that 45% of environmental targets can benefit from BESS development. Specifically, BESS can positively affect 60% of SDG 13 (climate action) by its potential to reduce greenhouse gas (GHG) emissions by enabling the integration of renewable energy sources (RES) into the power grid and effectively minimizing utilization of traditional fossil fuels. The BESS helps maintain grid stability by storing energy that is not used during peak hours. This energy comes mostly from renewable sources and is then sent back to the system when the demand is highest. Primary function of BESS includes energy storage and time-shifting, regulation of frequency, voltage support, enhancement of grid reliability²⁷. However, its bug environmental advantage is increasing the ability to use the full potential of the renewable system without grid-related restrictions. BESS can lower CO2 emissions in the power sector by up to 70% by 2050.²⁸ Another factor contributing to SGD 13 is facilitating the electrification of the transport sector, although this is related to a social aspects.

BESS can also contribute to 40% and 17% of SDGs 14 (life below water) and 15 (life on land), respectively. This is related to reducing pollution levels from marine activities, such as ships which use outdated power generation, BESS, such as sodium-sulphur and flow battery are used to eliminate the high fluctuation of marine tidal current in creating a stable marine power supply while reducing the pollution level, desalination, and providing many other benefits to life, land, and water to maintain the ecosystem.²⁸

Those positive contributions of battery storage are happening, which can be observed by a significant increase in the total installed BESS power capacity globally: less than 20GW in 2018, around 100GW in 2024.²⁹ It is forecasted that by 2040, installed BESS capacity will exceed 900GW.²⁹ Nine markets will represent two-thirds of the installed global capacity: China, the United States, India, Japan, Germany, France, Australia, South Korea and the U.K.²⁹ Simultaneously, BESS can have negative contributions to SDGs which are related to its production, which generates significant GHG emissions and involves hazardous materials. Battery transportation also releases pollutants that contribute to environmental degradation.²⁸ For a comprehensive and objective overview, it is important to assess the lifecycle for battery technologies and compare it with alternatives.

3.2 BESS among various energy storage technologies

Following the concept that the development of energy storage is crucial for improvement and flexibility of renewable energy system, what remains is to compare the environmental impact of various storage technologies – refer to the Table 1.

It is crucial to notice that choice of the specific technology is determined by the various factors: expected lifetime of the system, number of charging and discharging cycles, amount of energy to be stored, location, geographical opportunities and constraints, maintenance needs. All those aspects have indirect impact on the environment, but they determine the efficiency and ‘fit for purpose’. Every storage technology has both positive and negative environmental impacts, so it is crucial to determine the most suitable field of its application. This can be achieved through attributional analysis used in the lifecycle inventory. This process involves the collection and quantification of all relevant inputs and outputs for a system throughout its entire life cycle. The LCI aims to provide a comprehensive inventory of environmental resources consumed and pollutants released at each stage of the product life cycle, from raw material extraction through production, use, and disposal/recycling.  

However, for a long-term analysis it seems crucial to use consequential analysis to examine how changes affect the system’s dynamics and environmental impacts. It is more complex and could involve more modelling and predictive scenarios based on market behaviour. This type of analysis seems more reasonable in terms of the evolving and dynamic market of BESS. It allows to understand how environmental negative impacts can be minimized or even completely removed. Constant research driven by environmental targets set up in various policies is followed by new battery technologies, which are more efficient, recyclable and therefore contribute to better environmental performance of the whole life cycle of battery system.  The Figure 1 below represents a typical Life Cycle Assessment (LCA) boundary³⁰ which is usually considered for energy storage systems. In the subsequent chapters, the paper will provide a conceptual overview that integrates both attributional and consequential approaches, with a primary focus on Battery Energy Storage Systems (BESS).

3.3 BESS Life Cycle Assessment 

3.3.1 Material production – resources 

The production of batteries starts with the extraction of raw materials, including lithium, cobalt, and nickel. The mining of these resources is often associated with environmentally harmful practices.³¹

Two primary methods employed to extract minerals for battery production are open-pit mining and brine extraction. The primary method for lithium recovery is brine extraction, which entails pumping substantial volumes of water into salt flats to bring mineral-rich saltwater to the surface. As the water evaporates, lithium is isolated from the remaining mixture. However, this water-intensive process poses risks of contaminating local water supplies. Most of the world’s lithium reserves are found in the Lithium Triangle, which spans the arid regions of the Andean Mountains in Argentina, Bolivia, and Chile. This area, one of the driest on Earth, sees lithium mining consuming up to 65 percent of its water resources, intensifying existing water scarcity challenges.³²

Cobalt (essential also for electric vehicles’ batteries) is predominantly sourced from the Democratic Republic of Congo (DRC). The environmental consequences of cobalt mining are significant, as the process generates hazardous byproducts that can harm surrounding ecosystems. Sulphur present at mining sites can lead to the formation of sulfuric acid when it comes into contact with air and water, resulting in pollution of rivers and streams and adversely affecting aquatic life.³² Moreover, the extraction of cobalt in the DRC has raised serious ethical concerns (described in chapter 4). 

In conclusion, lithium extraction can significantly deplete water resources in arid areas, while cobalt mining is commonly linked to deforestation and soil degradation. Similar problems arise from mining other rare metals used in the battery production. There are of course other rare metals used in the battery production, as well as abundant metals. The composition of the batteries varies between different types, preferable for certain applications. For example, sodium-ion batteries’ structure is analogous to lithium-ion batteries, but sodium-ion batteries require less or no critical raw materials and are even safer to operate. While their energy density – both volumetric and gravimetric – is slightly lower than that of lithium-ion batteries, they are better suited for stationary applications rather than for e-mobility.³³ This technology is relatively new, so the mass production is expected to increase. It represents a more sustainable direction, as sodium mining is considered to have less severe environmental impacts compared to other materials like lithium or cobalt.

Nevertheless, any mining activities can disrupt habitats or release harmful substances into the air and water, leading to pollution and adversely affecting local ecosystems. Adherence to strict environmental regulations is essential for mitigating the impact of mining on ecosystems.³¹ However, the best solution for this problem seems to be prevention by implementation of circular economy principles. Mining activities can be significantly reduced as far as battery materials are kept in circulation through processes like maintenance, reuse, but mainly recycling (refer to 3.3.4).

3.3.2 Transportation, manufacturing, construction and operation

Transportation of battery materials and final battery products is usually responsible for less than 1% of the life cycle greenhouse gases’ emissions³⁰ and usually not included in studies focused on life cycle environmental impact analysis. It shall be mentioned that there are also risks associated with the transport of battery materials, especially in case of accidents and release of substances harmful to the environment. 

The next stage in energy storage system lifespan is construction. However, in case of batteries, the focus is usually on manufacturing process and assembly of battery products. Term construction seems to be more valid in case large battery storage sites including buildings or containers and associated infrastructure, so the terminology is somehow determined by the scale of the project.

Manufacturing processes for batteries in general require large amounts of energy and involve hazardous chemicals.³⁴ For example, lithium-ion batteries are susceptible to thermal runaway, a situation in which the battery overheats and poses a risk of fire or explosion. This danger increases during manufacturing if the cells are damaged or assembled incorrectly. Additionally, mishandling of chemicals used in battery production can result in hazardous reactions, leading to potential fires or explosions.³¹ To effectively manage these risks, comprehensive safety protocols and specialized infrastructure are essential for prevention and mitigation.

Safety considerations need to be of course applied during the construction and operational stage, as there are also high environmental risks. Various types of batteries require different operational conditions to function efficiently and safely. Most of the battery systems require ventilation and air conditioning to mitigate the risks of excessive heat production during the battery operation. For example, Li-ion batteries are voltage and temperature sensitive and can operate safely only under certain cell voltage and temperature windows.³⁵There are also other undesirable conditions which can cause a battery failure as explained in the Figure 2 below. 

This is often associated with flammable gases being ejected from the cell, forming either a fully ignited cell external flame with temperatures of 750–1000 ◦C or causing a fire and explosion hazard in the vicinity. Apart from released greenhouse gases, the ejected gaseous emissions contain highly toxic compounds (e.g., HF and CO), causing environmental and human harm.³⁵

The Sodium-Sulphur batteries operate are most efficient at the high temperatures between (300 and 350 °C)²⁵. It requires heating, at least before the cell can begin operation. Of course, this raises an extra environmental concern related to the source of the heating.  The heat energy collected from the sun can be used to pre-heat the cells and maintain the high temperatures for short periods between use. Once running, the heat produced by charging and discharging cycles is sufficient to maintain operating temperatures and usually no external source is required²⁵ assuming that appropriate thermal insulation has been installed. 

All those environmental risks can be mitigated through proper design of the battery storage. Insulated battery containers, air conditioning, fire alarms³⁶ and automatic extinguishing agent systems connected to the control room are already being used in exiting battery storage systems. This is essential to keep allow the main goal of the grid-scale battery storage performed during their operational stage: providing important system services that range from short-term balancing and operating reserves, ancillary services for grid stability and deferment of investment in new transmission and distribution lines, to long-term energy storage and restoring grid operations following a blackout.¹⁶ 

3.3.3 After service life – disposal or recyclability

It is very important what happens with batteries once they reach their End of Life (EOL), so when they can no longer perform effectively or hold a charge sufficient for their intended use. Improperly disposed batteries contribute to environmental pollution. The chemicals produced during their corrosion can contaminate water and soil ecosystems. Lithium batteries can even cause landfill fires releasing harmful gases into the atmosphere.³⁴

Battery demand is set to continue growing fast based on current policy settings, increasing four-and-a-half times by 2030 and more than seven times by 2035.³⁷ In case of the lithium batteries, the demand is driven by the electric vehicles (EV) industry. However, the huge driving factor is the battery storage demand. Grid-scale battery storage needs to grow significantly to get on track with the Net Zero Scenario (a normative scenario that shows a pathway for the global energy sector to achieve net zero CO₂ emissions by 2050)¹⁶. Battery costs have fallen dramatically in recent years due to EV production. However, rising costs for key minerals used in battery production, notably lithium, can be observed¹⁶. 

Following above, recycling of the batteries seems crucial to fulfil their role in reducing CO₂ emissions while minimizing environmentally negative side effects of battery materials mining. 

It is difficult to find information about the battery recycling statistics worldwide, but in general, the trend of increasing recycling can be observed. The percentage of recycled batteries varies, of course, depending on the region and type of the battery. The well-known lead batteries achieved the highest recycling result of 65-95% in the European countries (in 2022)³⁸ and even up to 99% in the United States (according to the report published in 2021).³⁹ To give it a better perspective of environmental impact reduction, it shall be noted that using recycled lead for new lead batteries instead of virgin materials to source lead for new batteries, uses 90% less energy and produces 90% less greenhouse gas.³⁹ The recyclability of other types of batteries in Europe is generally above 50% (in 2022)³⁸ and it can also be observed that recycling goals are being taken seriously – in 2012 the recycling rate in some European countries was only even less than 20%.³⁸ However, the Eurostat report does not distinguish between various types of the batteries within the ‘other types’ range. 

For example, recycling of lithium-ion batteries faces many challenges: inefficient collection infrastructure and lack of steady supply, technological challenges and safety concerns, inefficiencies and a lack of profitability of recycling operations, low demand for “used” products considered by many as inferior in quality.⁴⁰ The recycling rate of lithium-ion batteries up to 2021 was estimated to be around 5% per year³⁹. This result is not very well explained and may not be correct, but in general, there is not much information available regarding the success level of lithium-ion recycling worldwide.

Addressing recycling barriers requires a multi-faceted approach involving technological advancements, improved policy (global standards for battery disposal)³⁴, and changes in consumer awareness and behaviour. 

4      Social Impact

4.1       Social Acceptance of Battery Storage 

According to World Energy Transition Outlook 2023, to achieve the goal of 1.5 Celsius, there is need to invest in 1000 GW of renewable energy every year. From 2013 tom 2020, about 75% of the investment in the Renewable Energy sector was funded by private sector. These number depicts that the people and private enterprises are interested toward renewable energy deployment at large. For a resilient and flexible renewable energy system, physical infrastructure needs to be strengthened, and energy storage is a major stake in this transformation. Public acceptance is very crucial for success of any large-scale infrastructure development, policy making or taking technology initiative. Stakeholders must be listened to and their concerns must be addressed and taken care of. The transparency in the project, public involvement are the factors that reduces scepticism⁴¹. The variability of the renewable energy must be addressed for the complete integration into the energy infrastructure, and it is linked to the installation of large-scale energy storage systems.⁴²Therefor the socially acceptance of battery storage is very important to foster the development of renewable energy technologies. According to the IEA data statistics¹, the battery storage capacity has upside trend over the last decade as shown in the Figure 3 below.

4.2       Historical and Current Trends

Like any other new technology, BESS also facing acceptance challenges based on historical events, NIMBY attitude and cost factors. There has been situation when people opposed the projects related to Renewable Energy, due to land allocation, safety concerns and past incidents. Recently, residents in New York came out to oppose the construction of large-scale battery storage plants due to safety concerns, especially after incident of fire at a California battery storage facility.⁴³  Same happened against another battery storage system site in Boulder Combe, Australia, where rural town residents protested for Battery Energy Storage System (BESS) installation following a fire at another battery project, due to safety concerns of the community.⁴⁴

The support for the green initiatives, bio products and green energy is growing publicly on vast grounds. People are accepting green standard and have a sense of social responsibility to make the planet green and play their role to curb greenhouse emissions. The introduction of incentives by the government plays a very key role to navigate the purchasing decisions of the buyers. China had a record sale of EV’s of 11 million vehicles in 2024.⁴⁵ This was the result of the subsidy provided by the National Development and Reform Commission, of giving credit of 20.000 yuan (2.764 $) per vehicle purchase. This policy enhanced the purchase trend for the EVs, ultimately the mass production caused the decline in the prices of the batteries and EVs in China.⁴⁶

4.3       Positive Social Impacts 

4.3.1    Health and Environmental Benefits

The global demand for the batteries is projected to rise annually by 25%.⁴⁷ It will have a very positive impact on the emissions control and green energy integration. There are 169 targets groups to achieve the 17 SDGs, the impact of BESS was assessed over the different targets affecting the achievements of the SDGS set for 2030. Overall, 60 targets were positively affected by the implementation of BESS.  The 17 SDGs are grouped into three big categories as Environment, Society and Economy,  BESS help in achieving targets belonging to these 3 areas.²⁸ This implies toward reduced emissions, thus better air quality, fewer illnesses related to the respiratory problems, affordable energy solutions for remote areas. 

4.3.2    Job Creation

A battery manufacturing facility directly and indirectly creates thousands of jobs and new roles in the areas of facility civil works, supply chain, battery cell production, engineering and design, assembly line, packing and sales. For example, the facilities like Tesla Gigafactory in Nevada (USA), alone created 7000 jobs when it started back inn 2018 and this number is expected to grow.²⁵  

4.3.3     Reducing Social Inequality and Use with Renewables in Isolated Areas

A comprehensive study on the multiplications of PV cells with battery energy storage systems for solar lanterns and solar homes in the remote areas of developing countries, like Peru, Burkina Faso, Bangladesh, South Africa, Kenya, Cambodia, part which are not connected to the grid have shown a great positive impact on the life of people living there. Their standard of living elevated, their usage time was changed and more flexible, they had access to the global information, they can watch TV at night, charge their mobile phone and their children can study at home for extra hours and sense of safety at night. It also helped the family in savings from the high costs of cancel sand kerosene lanterns. The decreasing price of battery systems and PV panels could bring a very positive change in the life of people living in the remote areas., and hence reducing social inequality for the people from underdeveloped world, improving urban-rural energy gaps.⁴⁸

4.4       Negative Social Impacts

4.4.1     Health and Safety Concerns

Fires in electric vehicles powered by high-voltage lithium-ion batteries pose the risk of electric shock to emergency responders from exposure to the high-voltage components of a damaged lithium-ion battery. A further risk is that damaged cells in the battery can experience uncontrolled increases in temperature and pressure (thermal runaway), which can lead to hazards such as battery reignition/fire. The risks of electric shock and battery reignition/fire arise from the “stranded” energy that remains in a damaged battery.

As the demand for electric vehicles increasing, there is also a dire need to keep the safety procedures and protocols UpToDate. The fire from the accidents with the electric vehicles, poses a risk of electric shock and exposure to chemical substance for the energy fire responders. The damaged cells in the battery or poor manufacturing quality can cause uncontrolled temperature and pressure rise, making ways for fire abruption. There is always a chance of getting an electric shock from thew stranded currents for the damaged batteries. ⁴⁹Therefore, as we advance in the adoption of BESS, we must make sure that the relevant and updated procedures are established and followed for the safety of stakeholders.

Lead acid batteries are proven technology⁵⁰, which is cheaper and widely used in the low – and middle-income countries (LMICs). Because of majority use, it’s always available for recycling in great quantities. As for the low-income countries, there are immature recycling industries employing child labour and exposing techniques to produce low cost recycled battery.  To make thew matter more worst, there is no exact idea of true level of lead exposure in the population due to non-existence of biomonitoring programs.⁵¹

4.4.2     Mining of Resources

Cobalt is very important element for the rechargeable batteries. Around 20% of the Cobalt in global supply chain comes from Democratic Republic of the Congo. Serious Human Rights violations were found in the areas of cobalt mining where child labour under 7 was employed in very fragile condition, with no supply of basic safety equipment’s, gloves, proper work clothes, facemasks. They have been developing serious respiratory problem in these Artisanal mine workers.⁵² The workers working in the mining materials for the batteries must be taken care of. The companies involved in the mining of battery materials should disclose their due diligences, government should ensure that the labour laws are intact and being followed, and no child labour is used in such perilous job.⁵²

4.4.3     Job Displacement

The advancement in the BESS is greatly linked to the development renewable energy in greater and green electricity. The transition to the post carbon era will cause a disruption of employment in the industries with high carbon footprint. If the transition is planned in a well-designed and formulated way, there could be a net positive increase in the jobs afterward. There is a need to materialize the energy sector with the construction and manufacturing sectors in phases. The first phase would employee the people for the construction of infrastructure and in the second phase those worker need to be trained for the operation and maintenance of the designed system to keep an upstream for the employment. proper investment in the training and human resource development needs to be done timely. ⁵³

As the BESS is still evolving and development is underway, they are costly now. Due to the high cost of BESS, EVs, smart grids, they might be inaccessible to the low-income families. The development in the advanced and large BESS in inevitable for complete integration of Renewable energy into the system.⁴² Although this transition is necessary to achieve the zero emission and fight the climate change, but this will also create winners and losers. For-example the workers from the fossil fuel industry will face unemployment, and may suffer from economic collapse, lost tax revenues, low quality of life. The new renewable jobs often don’t match the skills and location of the displaced workers causing economic burden on the society.⁵⁴

Transformation to the 100% green energy is inseparable from the development of macro and micro energy storage systems, to ensure that there are no losers in the transition of energy systems by the development of state-of-the-art energy storage systems, the key drivers must design policies to include all the stakeholders to benefit from the new technologies. Workforce programs must be initiated to ensure retaining and prepare fossil fuel workers for the new jobs. There must be energy assistance programs, like US energy bill help, other aids to support low- and middle-income countries to get benefit from cheap energy form there improved and resilient energy systems. ⁵⁴

5      Political and Legal Aspects

Policies play an important role in shaping the development and diffusion of the battery storage. Achieving the previously mentioned economic, environmental, and social goals hinges on the sustainable utilization of BESS potential. To increase the deployment of BESS in the power grid, electrification, and transportation, energy utilities, public policymakers, and financial institutions along with battery manufacturers, must advance the deployment and design of related to life cycle emissions to reduce all side effects of BESS technology.²⁸

Several important policies have already shaped the development and diffusion of battery storage technology across different countries. These policies vary significantly depending on national priorities, energy mixes, and regulatory frameworks. 

5.1 Indirect Renewable Energy policies

It shall be noted that battery storage policies often derive as an effect of successful implementation of other policies promoting renewable energy sources. In many cases, the diffusion of RE was a driving force for BESS, which is being understood as an essential part of the new energy systems. An example here can be Germany, where various policies promoting photovoltaic (PV) panels installation were implemented starting from PV research programmes in 1977, through demonstration program (in 1990 and 1998), Feed-In Law (in 1991), Feed-in Tariffs (in 1992), Renewable Energy Sources Act (in 2000) and European Emissions Trading System (in 2004)⁵⁵. The success of PV (as well as wind energy) development was associated with the problem of grid and market integration of renewables. As described before, BESS contributes to grid reliability – postponing the need for grid reinforcement and allowing congestion management⁵⁶. It also contributes positively to market balance by limiting the negative effects of stochastic energy production by renewable technologies. In Germany, behind-the-meter storage is developing strongly, driven by a context of strong development of rooftop PV and electric vehicles (EVs), increasing incentives for energy management by consumers.⁵⁷

Of course, other countries are also aware of the advantages of energy storage. Japan is a market leader for behind-the-meter storage⁵⁷ which again was driven by renewable energy policies. Based on the “Act on Special Measures Concerning the Procurement of Renewable Energy Electricity by Electricity Utilities (Renewable Energy Special Measures Act)” enacted in 2011, the Feed-in tariff (FIT) system was introduced in 2012.⁵⁸ The “FIT surcharge” is the source of funding for the purchase of renewable energy by electric power companies. Of course, this situation encourages RE producers to install BESS systems to allow them to sell energy even regardless the grid capacities. 

In the USA, the strong development of solar PV, mainly driven by the solar-investment tax credit⁵⁷, also plays an important role in raising the value of BESS. US has also seen front-of-the-meter projects being developed by private companies due to high peak prices in the electricity markets⁵⁷. 

All above leads to the conclusion that initial BESS development was significantly driven by the RE market. Taking EU as an example, the oldest policies related to batteries from the 1970s-1990s were mainly waste directives referring to overall goals of battery disposal. As the EU increased its focus on renewable energy sources (solar, wind), the need for grid-scale storage became more apparent. Renewable energy supporting policies indirectly promoted the development of energy storage solutions but only in more recent years have EU policies directly and explicitly addressed grid-scale energy storage as a specific technology. Energy storage became even more important for EU energy supply safety, affected in 2022 by geopolitical tensions, particularly the impact of the war in Ukraine. The response for this crisis was the REPowerEU plan which specifically highlights the importance of energy storage in facilitating the integration of renewable generation, supporting the grid and ‘shifting’ energy so that it is available when it is most needed.⁵⁷

5.2 Energy storage policies

Governments still influence BESS development by implementing directly BESS-related policies. Many instruments are used to promote even further this growing technology. Technology-Push Policies aim at directly strengthening the supply of new products and technologies, Systemic Policies support functions operating at system level, and Demand-Pull Policies are focused on increasing demand for products by changing market conditions. In case of BESS, the last type of the policy is unique as the demand for the battery storage can come from energy producers, energy consumers or energy prosumers.

5.2.1 Demand-Pull Policies

As mentioned in the previous chapters, BESS demand is highly driven by its ability to provide different services to the energy system, which also can provide a stream of revenues. All those advantages related to firm capacity for peak demand, ancillary services and congestion management, transmission and distribution replacement, network deferral or black-start capability⁵⁷ are being further promoted by governments. Even though the BESS market conditions provide a positive business case, investors need long-term visibility and predictability of revenues to decrease risks of the projects. Policy tools, such as: decarbonised capacity contracts; floor and ceiling pricing; 24/7 clean power purchase agreements; contracts for difference; hourly energy attribute certificates; or energy savings performance contracts⁵⁷ can reduce market risks related to revenue uncertainty. However, those are still related to renewable energy investments. Other instruments such as network charges and tariffs are particularly relevant for promoting energy storage. Well-designed network charges and tariff schemes could increase the use of flexibility tools like energy storage to reduce consumption from the grid during peak hours.⁵⁷ One of the tools used worldwide is Time-of-use tariff (ToU), which aims to change energy loads during specific time intervals by exposing consumers to the correct cost-reflective price signals⁵⁹. 17 EU countries, the USA and India applied ToU tariffs. Static ToU are mandatory for most low-voltage consumers in Italy.⁵⁹ Dynamic real-time pricing is applied in Estonia, Romania, Spain, Sweden and the UK, and other dynamic methods of pricing are imposed on customers from Denmark and Norway. Critical Peak Pricing (CPP) is applied to a smaller extent in the UK, Lithuania, Portugal, Romania and France – electricity rates increase significantly during specific periods when demand for electricity reaches critical levels. It is self-explanatory how those tariffs promote the implementation of the BESS by Renewable Energy Source plants and consumers – both businesses and private households. Consumers benefit from electricity bill savings through more efficient use of self-generated renewable energy and reducing reliance on the grid during high-cost energy times, when simultaneously suppliers can increase their revenues. The solution results also in increased competition among suppliers in the retail market, as a driver for innovative business models.⁵⁹

However, specific network charges and tariffs may be needed for energy-storage given its double role as a ‘consumer’ and ‘generator’ of energy⁵⁷. Most of the EU countries have ‘Injection’ charges (charges for adding stored or newly generated power to the energy system) but several EU Member States also apply injection and withdrawing charges (charges for ‘withdrawing’ energy to a storage system).⁵⁷ Those two opposite charges technically apply to energy storage, which can be then negatively influenced by double taxing. Therefore, special tariff structures, tariffs exceptions are applied, or a new definition of energy storage is incorporated in the legislative frameworks. The last solution was incorporated in Belgium, Poland, Spain, Germany and Ireland, which simplifies and facilitates the specific consideration of energy storage in national procedures, thus reducing the burden of energy storage being treated simultaneously as both consumer and producer.⁵⁷

The implementation of some key elements of EU legislation could further facilitate the uptake of energy storage in the electricity markets, for example: removing price caps; reducing minimum bid sizes; developing new flexibility services; or avoiding non-remunerated, non-frequency ancillary services. For example, by removing price caps, energy storage operators can potentially receive higher compensation for providing electricity during peak demand, making their operations more financially viable. Lowering minimum bid requirements would allow smaller energy storage systems to participate more easily in the market, increasing overall competition and flexibility in the grid.

Subsidies are another demand-pull tool. Its effectiveness was proved in Korea – in 2018 the country was accounted for a third of the total new storage capacity installed worldwide thanks to federal subsidy schemes.⁵⁷ In Europe, there are also specific support and financing tools available to incentivise the deployment of energy storage, financed from both the EU’s long-term budget as well as from the NextGenerationEU (NGEU) package.⁵⁷

5.2.2 Systemic Policies

The systemic policies can further encourage investment in BESS. Giving stored energy priority connection to the grid is one of the instruments that was used in China. This combined with the national energy-storage target of 30 GW by 2025 boosted yearly energy storage installations between 2020 and 2021 from 0.6 to 1.6 GW⁵⁷. Of course, overall energy storage capacity includes not only batteries, but those are dominating in case of systems coordinated with RES and behind the meter storages.

Systemic policies can control the BESS market by restricting access to various participants and foster the efficient usage of their facilities in the energy markets. For example, storage ownership from TSOs/DSOs is restricted, according to Directive (EU) 2019/944⁵⁶. This promotes behind-the-meter (BtM) storage in RES plants and small-scale storage in consumers’ premises. EU Directives need to be followed by EU Members and as an example in 2022, Ministerial Decision 84014/7123 in Greece establishes grid access priority to FtM storage facilities, with operating restrictions to avoid impacting RES hosting capacity. Same decision prioritises RES plants with BtM storage over plain RES⁵⁶. These policies enhance opportunities for renewable energy producers to mitigate curtailments due to congestion and minimize potential imbalance charges, thereby effectively reducing the negative economic impact of other necessary policies required for grid stability.

Utilising BtM storages still could bring benefits also for grid operators. Unfortunately, it is rarely assessed as an alternative option that could help operators to defer investment in networks.⁵⁷ This is why BESS needs to be further promoted at the level of national plans for network development. This could be achieved by specific permit-granting procedures or by encouraging grid operators to make flexible connection contracts. 

5.2.3 Technology – Pull Policies

As mentioned in chapter 3.1, BESS installed capacity is continuously rising. This, of course, would not be possible without a stable supply chain. It is not only about the quantity but also the quality of the batteries and their overall performance related to economic, environmental and social aspects. The maturity and competitiveness of energy storage in terms of costs and capacity is improving worldwide.⁵⁷

There are many research and innovation programmes in the EU paying special attention to energy-storage technologies and their integration in the energy system, in particular through Horizon Europe104.⁵⁷ These programmes include substantial funding support for battery partnerships over the 2021-2027 period. Apart from support to lithium-ion batteries, several Horizon Europe projects also support alternative battery chemistries (such as sodium-ion or organic flow batteries).⁵⁷ EU funding is complemented by national funding for research and innovation, with specific calls for energy-storage projects (e.g. Bulgaria, Germany, Spain, France, Croatia, Luxembourg, Austria or Slovenia).⁵⁷

India also has a production-linked incentive scheme for advanced chemistry cells which aims to boost battery manufacturing in the country. 

In the US, specific initiatives such as the Inflation Reduction Act or the American Battery Materials Initiative aim at further strengthening the development and deployment of energy storage in the US.⁵⁷ These actions are also to improve America’s energy independence, strengthen national security, support good-paying jobs across battery supply chains⁶⁰. 

The battery materials shortage is also recognised as a risk for the energy supply system in Europe and is addressed in the previously mentioned REPowerEU program. The lithium-ion technology is preferred for utility-scale applications, but it faces issues related to lithium sourcing and increased demand for electric vehicles (refer to chapter 3.3.1 and 3.3.3). Sodium, zinc and silicon-based batteries may also emerge as commercially viable alternatives to lithium-based batteries⁶⁰. However, promoting battery recycling through various waste management policies is already being implemented in countries worldwide and aims also to improve batteries’ environmental impact.

European Union’s Battery Directive, California’s Battery Recycling Law, Japan’s Home Appliance Recycling Law, Canada’s Extended Producer Responsibility (EPR) Programs,

China’s Circular Economy Promotion Law or Australia’s Battery Stewardship Scheme, the EU End-of-Life Vehicles Directive are examples of policies and initiatives implemented to set directions to circular economy. They don’t only focus on the battery storage recycling but aim to retrieve materials from battery-driven electric devices or vehicles.

There are also other innovative ideas related to using electric vehicles as a battery storage. The revised Renewable Energy Directive (as well as the Energy Performance of Buildings Directive) will further promote the uptake of electric vehicles. They will provide requirements for Member States to ensure non-discriminatory access to electricity markets for small mobile systems such as domestic and electric vehicle (EV) batteries allowing them to provide flexibility services – including storage – to the electricity grid.⁵⁷

All above leads to the conclusion that initial BESS development was significantly driven by the RE market.  Nevertheless, policies are important to ensure a smooth transition into the new energy system prioritising renewable energies. Legal, technical, financial, social, and environmental difficulties encountered throughout the battery storage life cycle often need to be addressed by national policies to facilitate further development of sustainable battery storage. Of course, there can be debate regarding the extent to which these policies should impact the market, particularly in economic terms. Nonetheless, they appear essential to ensure that the world moves toward a sustainable future.

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