From a technological standpoint, the primary factors that customers prioritize when it comes to batteries are cycle life and cost-effectiveness. Presently, lithium-ion batteries are prevailing because they fulfill customer requirements. In the past, the dominant choice for battery chemistry was a nickel manganese cobalt cathode. However, lithium iron phosphate (LFP) has emerged as a more cost-effective alternative, surpassing it in popularity. (Customers of lithium iron phosphate are willing to acknowledge that LFP may have certain limitations compared to nickel batteries, particularly in terms of energy density.) Nevertheless, the scarcity of lithium has led to the exploration of various intriguing and promising battery technologies, with a particular focus on cell-based options like sodium-ion (Na-ion), sodium-sulfur (Na-S), metal-air, and flow batteries.
The last section of the C&I subsegment encompasses challenging settings, including mining, construction, oil and gas exploration, as well as outdoor festivals. The driving force behind its expansion will be customers shifting from diesel or gas generators towards eco-friendly options like BESS and hybrid generators in order to mitigate emissions. One of the primary catalysts for the increasing adoption in this sector is the implementation of forthcoming regulations, such as the European Commission's sustainability-driven Big Buyers initiative and Oslo's objective to achieve net zero on construction sites by 2025. A significant number of companies transitioning to more environmentally friendly practices will initially opt for hybrid genset solutions as an intermediate step before fully transitioning to Battery Energy Storage Systems (BESS).
In response to economic and operational challenges, there is a prevailing tendency within the industry to enhance or modify the EMS. Making the decision to retrofit the EMS carries significant weight, hence it is vital to meticulously plan the sequence of retrofitting actions. Approximately 20% of the deal flow that FlexGen handles consists of retrofits.
Considering the multitude of customer segments, varying business models, and imminent changes in technology, this question holds significant importance. Here are four strategies that could potentially lead to success in the market:
In conclusion, a percentage ranging from 10 to 20 is linked to sales entities, project development organizations, as well as other endeavors focused on acquiring customers and commissioning (Exhibit 4).
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The third division comprises public infrastructure, commercial establishments, and industrial facilities. Within this category, energy storage systems will primarily be deployed to assist with load management during peak periods, facilitate the integration of on-site renewable energy sources, optimize self-consumption, serve as a backup power source, and support grid-related services. It is our belief that BESS holds the capacity to decrease energy expenses in these regions by a staggering 80 percent. The case for implementing BESS is particularly compelling in countries like Germany, North America, and the United Kingdom, where demand charges are frequently imposed.
If the project consists of multiple inverters, then only one inverter and its corresponding batteries are required for step 6. As a result, the remaining components of the project can continue functioning with a partial outage while the full outage, lasting two weeks, is solely necessary for the completion of step 7.
In order to monitor battery readings, the SCADA system generally establishes direct communication with the BMS. Additionally, there may be a need or advantage for the SCADA system to communicate with DC-DC converters, inverters, and auxiliary meters in order to effectively manage the BMS.
The main clientele for FTM installations consists of utilities, grid operators, and renewable developers who seek to address the sporadic nature of renewables, offer grid stability services, or avoid expensive investments in their grid. Typically, the BESS providers in this sector are either vertically integrated battery manufacturers or prominent system integrators. They will set themselves apart based on factors such as price and scope, dependability, their history of successfully managing projects, and their aptitude for creating energy management systems and software solutions for grid optimization and trading.
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Promote the development of robustness within supply chains. Numerous essential components of BESS (from battery cells to semiconductors in inverters and control systems) depend on intricate supply chains that are vulnerable to disruptions arising from various factors such as scarcities of raw materials and modifications in regulations. When establishing a supply chain strategy, it is important to take into account various factors such as strategic partnerships, multi-sourcing, and local sourcing. Additionally, planning for potential technological changes should not be overlooked. In addition to addressing BESS components, those operating in the industry also face challenges when it comes to engineering, procurement, and construction (EPC) capability and capacity, especially for front-of-the-meter applications. To achieve smooth execution of BESS projects, it is imperative to establish strategic collaborations with prominent EPC companies that have the capacity for large-scale BESS installations.
As the next stage of objectives outlined in the Paris Agreement draws near, governmental bodies and various organizations are actively seeking to enhance the uptake of renewable energy sources. Certain regions, heavily reliant on energy consumption, offer additional incentives to encourage the exploration of alternatives to conventional energy methods. In Europe, the motivation arises from an energy crisis, while in the United States, it originates from the Inflation Reduction Act, a legislation passed in 2022 that designates $370 billion for clean-energy investments.
Additionally, there are the tasks related to system integration, encompassing the comprehensive planning and creation of energy management systems and additional software to enhance the adaptability and utility of BESS. We anticipate these integrators to capture an additional 25 to 30 percent of the profit allocation accessible.
The project's operating system, known as the energy management system (EMS), assumes responsibility for controlling (charging and discharging), optimizing (revenue and health), and ensuring safety (electrical and fire). The EMS operates in conjunction with the inverters, battery management system (BMS), breakers, and fire system to coordinate their functions. However, what occurs in the event that it does not yield satisfactory results?
The financial strategies for utility-scale Battery Energy Storage Systems (BESS) are greatly influenced by the unique characteristics of the regions in which providers establish themselves. Typically, players in this sector opt for a revenue stacking approach, which involves aggregating incomes from multiple sources. They may engage in supplementary offerings, arbitrage, and capacity auctions. For instance, numerous BESS installations in the United Kingdom presently focus on ancillary services like frequency regulation. In Italy, there are talented players who have achieved success by emerging victorious in one of the country's capacity auctions that prioritize renewable energy. On the other hand, in Germany, the focus is more on evading expensive grid enhancements in order to seize opportunities. The successful players in the FTM utility sector have recognized the importance of tailoring their approach to individual countries and their regulations, rather than relying on a singular, all-encompassing strategy.
To gain a comprehensive understanding of the potential advantages that come with BESS, it is ideal to divide the market based on user applications and sizes. Within BESS, there are three distinct segments: front-of-the-meter and BTM residential installations, typically ranging below 30 kWh (as shown in Exhibit 1).
C&I is divided into four subsegments, with the initial one being electric vehicle charging infrastructure (EVCI). According to the McKinsey Center for Future Mobility, electric vehicles (EVs) are projected to experience a significant increase in market share, rising from approximately 23 percent of global vehicle sales in 2025 to 45 percent by 2030. This rapid growth will necessitate the widespread expansion of standard charging stations and superchargers, thereby exerting strain on existing grid infrastructure and requiring expensive and time-consuming upgrades. In order to prevent this situation, charging station companies and owners might choose to install a Battery Energy Storage System (BESS) on their premises. Collaborations have already been established between BESS providers and electric vehicle manufacturers to construct additional Electric Vehicle Charging Infrastructure (EVCI), even in secluded areas.
Recognize a neglected requirement within the value chain. In an emerging industry like this, it is beneficial for companies to consider additional products and services they could expand into, either through internal growth or mergers and acquisitions. As an example, is there any hindrance preventing a system integrator from conducting in-house battery packaging? Or collaborating with a battery manufacturer to jointly develop a new cell chemistry? Moreover, is there any limitation preventing a battery manufacturer from incorporating system integration or service capabilities to attract a particular BESS sector, like utilities?
The Chief Executive Officer of FlexGen, a provider specialized in controlling energy storage software solutions, explains the definition and necessity of upgrading or retrofitting an energy management system (EMS) in operational battery energy storage system (BESS) projects.
HybridOS is FlexGen's proprietary energy management platform that optimizes the performance, efficiency, and reliability of battery storage systems through real-time monitoring, analytics, and control capabilities.
FlexGen's energy management solutions stand out due to their innovative HybridOS software, which offers unparalleled efficiency, flexibility, and intelligence in energy storage and management. Their commitment to integrating renewable energy sources, along with their expertise in delivering customized solutions and comprehensive lifecycle services, positions FlexGen as a leader in advanced energy management.
Yes, FlexGen's energy storage solutions are designed to seamlessly integrate with renewable energy sources like solar and wind, enabling efficient storage and utilization of renewable energy.