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Battery energy storage systems (BESS) consistently rank as one of the most sought-after smart building technologies among our community of building owners. Yet, when we asked these same leaders how they’ve successfully implemented BESS, the response was… silence. Despite its potential, BESS remains an elusive solution—highly desired but difficult to achieve.
In our continual effort to demystify smart building technology, we hosted our second-ever Category Roundtable on Battery Energy Storage Systems. A Category Roundtable is a virtual event based on the successes of NexusCon. We set the ground rules for the discussion by defining the category and priming the pump with challenges and considerations we’re hearing from interested technology buyers.
Then, we create intimate breakout rooms where building owners chat exclusively with other building owners, vendors with vendors, and service providers with service providers. These peer-to-peer conversations allow us to cut the bullshit and try to spur technology adoption by crowdsourcing requirements, obstacles, and lessons learned. Finally, we bring the group back together and do a moderated report out — so each group can hear a concise breakdown of the challenges and opportunities the other roles see within the category.
Enough about the process. The peer-to-peer conversations during the Roundtable between a diverse group of professionals trying to figure out BESS were inspiring, energizing, and transformative. Our 70+ participants included building owners like Google, Microsoft, GSA, and Feroce Real Estate, technology vendors like Siemens, Generac, and Brainbox AI, and service providers like Altura, Peak Power, and Cannon Design. Let’s dive into the key themes across the conversations.
Nexus Labs commonly cites six universal outcomes that building owners are trying to achieve with any smart building technology implementation. BESS has the potential to hit on at least five of those six capabilities, creating endless opportunities for building owners.
One building owner had penciled out an opportunity for approximately $800,000 in utility savings if they could utilize BESS for time-of-use (TOU) pricing optimization (i.e., consuming battery power when TOU pricing is high and using grid power when TOU pricing is low). Another building owner mentioned a plan to install over 9 MWh of batteries into campus buildings over the next year.
In terms of lowering carbon consumption, many building owners treat BESS as an add-on or second phase of renewable energy projects. As one building owner said, “We’re not just going out and buying the battery system; it’s part of a much larger comprehensive project to add to the payback of performance contracts.”
Batteries do little to lower carbon emissions for the building owner without having the renewable energy infrastructure to charge them cleanly. For solar projects, including BESS can act as the tipping point that makes the project economically justifiable.
Regarding risk mitigation and increasing resiliency, participants discussed using BESS as a carbon-emission-friendly backup power source, often replacing dirty-burning diesel generators. This opportunity comes with risk and reward. Like an uninterruptible power supply (UPS), BESS can offer a nearly instantaneous power switchover, while a diesel generator might take a few seconds to fire up. That instantaneous switchover can differentiate between success and failure in mission-critical systems. Additionally, BESS knocks out the power quality issues that can come from an inconsistent grid or a generator. Cleaner power quality can be crucial for sensitive equipment downstream. However, if the grid is dead, and your BESS is nearing empty, there’s not much you can do, while a diesel generator just needs its tank refilled.
Despite the buffet of enticing outcomes of installing BESS, building owners will only be successful if they choose a single outcome and stick to it. As one BESS implementer put it, “The most common assumption I’m debunking for customers is that a BESS can provide energy savings and resilience when in reality it cannot do both; it can only do one or the other.”
The most straightforward takeaway from the Roundtable was that if vendors can find a way to make it easy for building owners to utilize BESS to achieve their desired outcomes, they will win. The list of hurdles for BESS implementation today is not short:
The building owner we previously mentioned, who wants to save $800,000 in utility costs, has an issue: they don’t have outdoor space to install the BESS. That means the system would have to be installed within the building. Another building owner responded, “When we talk about lithium-ion within the confines of the building, it’s not a ‘no’ but a ‘hell no’ from regulatory and fire departments.”
Fires from lithium-ion batteries typically burn hotter and longer than those from other combustible materials, which massively increases the risk. Additionally, they are not quickly extinguished with water, and battery material can cause significant environmental issues if it contaminates our water systems.
There is a common sentiment that regulatory agencies and fire marshals are way behind on what is and isn’t allowed, which can stop an indoor implementation before it starts. Additionally, insurance providers juggle risk and the unknown, creating another significant expense for the building owner.
Organizations like NY-BEST are at the forefront of sorting through all the regulatory requirements so that solutions can be approved and building owners can install BESS safely. Additionally, BESS technology vendors are pushing on the ingenuity front—flow type batteries like iron flow and vanadium redox batteries, as well as lithium-ion batteries with improved cell isolation, show signs of optimism towards inherently safer solutions.
The challenge of indoor installation is pushing most successful installations outside to the parking lot (assuming there’s any room). But that still comes with its own set of issues. The further from the building, the more losses in transmission, decreasing efficiency. These systems require even more stringent water-proofing when installed in an area exposed to the environment, and local zoning approvals may also be an issue.
Regarding the demand for lithium-ion batteries, buildings compete with just about every other industry. This, along with variable global trade tariffs and limited North American suppliers, means that most building owners expect lead times and BESS prices to continue rising. Even if you can internally sell the project and navigate the regulations, you may struggle to get your hands on the product.
Despite the long list of challenges, our Roundtable featured many experts in buying, selling, and implementing BESS. Here are some of the best practices that were shared:
Your BESS is only as efficient as your decision-making on charging/discharging allows it to be. Or, as one building owner put it, “The operation is so risky and critical to revenue. It’s not easy to time the battery operations and keep it performing optimally. It’s typically utility jurisdiction and asset type specific. For instance, if your building runs 9 to 5 vs. 24/7, you’ll have two very different charging and discharging sequences. You need to find that software person who can tell you what the right application will be for you as the building owner. I would never try to do that on my own.”
Building owners must be confident that they have a defined methodology for charging and discharging their BESS before implementation to maximize operational efficiency. Many building owners trying to save on utility bills may base this charging strategy on utility tariff schedules, but if that tariff rate changes next month, will you be ready to pivot your strategy?
Today, the status quo is that building operators will take responsibility for this charge and discharge decision-making. But this is another task on their already full plate, requiring change management and education.
One building owner said, “This, to me, screams AI. The humans are going to fail. We really need the computer to take over and get the rules in place to make the right decisions”. Yet, there doesn’t seem to be a long list of software companies successfully applying AI and machine learning specifically to charge/discharge strategies. While this is related to virtual power plant (VPP) software, there seems to be a demand for BESS-specific control. We have created a new category in The Nexus Marketplace to represent this, called Battery Storage Optimization. If you know vendors who fit the definition within our Marketplace category page, please let us know; we’d love to talk to them and get them added to this new category.
The name of the game for building owners is to reduce risk. There were two main risk mitigation strategies we heard from our experts that building owners should consider applying:
Proving the ROI on a BESS can be challenging, given all the assumptions and factors necessary for success. Many BESS implementors now offer some form of energy performance contract (EPC) that shifts the risk away from the building owner. In these projects, upfront capital is minimal for the purchaser, and payment is based on realized energy savings.
This article primarily covers behind-the-meter solutions, a.k.a. within a building owner’s premises. But in-front-of-the-meter solutions for battery energy storage are arguably further along. Power Purchase Agreements (PPAs) can give a building owner a safer way to commit to purchasing energy from a BESS system without taking on the risk of ownership or installation. While this won’t give a building owner the same autonomy over the battery charge and discharge, it can be a more straightforward path to carbon reduction.
With BESS regulations still in the wild-west phases, the best place for interested buyers to start is local. If a BESS implementor has a successful installation on the other side of the country, those same regulations, utility tariffs, zoning requirements, and insurance policies may not apply to your region. Talking with your local utility provider, consultants, and electrical contractors will enlighten you on which neighbors may have already successfully made it through the same paperwork you’ll go through. Moreover, make sure you know who will lead the charge through regulations and working with the utility company. If it’s not the BESS vendor, is a professional consultant needed to own the approval processes?
Distributed energy resources (DERs) and microgrids are the answer to affordable and clean power. No silver bullet is coming; the solution will continually grow into a more complex ecosystem of renewables and utility-provided power. Battery energy storage systems promise to be a cornerstone of this complex solution to our building energy requirements, yet the industry is clearly in its infancy.
We’re excited to continue our work to accelerate the adoption of technologies like BESS by connecting building owners and vendors. If you’re a vendor in this space who would like to share your solution with our community, contact us to be included in our upcoming BESS RFI. If you’re a buyer interested in purchasing BESS, let us know where you are in your journey.
Battery energy storage systems (BESS) consistently rank as one of the most sought-after smart building technologies among our community of building owners. Yet, when we asked these same leaders how they’ve successfully implemented BESS, the response was… silence. Despite its potential, BESS remains an elusive solution—highly desired but difficult to achieve.
In our continual effort to demystify smart building technology, we hosted our second-ever Category Roundtable on Battery Energy Storage Systems. A Category Roundtable is a virtual event based on the successes of NexusCon. We set the ground rules for the discussion by defining the category and priming the pump with challenges and considerations we’re hearing from interested technology buyers.
Then, we create intimate breakout rooms where building owners chat exclusively with other building owners, vendors with vendors, and service providers with service providers. These peer-to-peer conversations allow us to cut the bullshit and try to spur technology adoption by crowdsourcing requirements, obstacles, and lessons learned. Finally, we bring the group back together and do a moderated report out — so each group can hear a concise breakdown of the challenges and opportunities the other roles see within the category.
Enough about the process. The peer-to-peer conversations during the Roundtable between a diverse group of professionals trying to figure out BESS were inspiring, energizing, and transformative. Our 70+ participants included building owners like Google, Microsoft, GSA, and Feroce Real Estate, technology vendors like Siemens, Generac, and Brainbox AI, and service providers like Altura, Peak Power, and Cannon Design. Let’s dive into the key themes across the conversations.
Nexus Labs commonly cites six universal outcomes that building owners are trying to achieve with any smart building technology implementation. BESS has the potential to hit on at least five of those six capabilities, creating endless opportunities for building owners.
One building owner had penciled out an opportunity for approximately $800,000 in utility savings if they could utilize BESS for time-of-use (TOU) pricing optimization (i.e., consuming battery power when TOU pricing is high and using grid power when TOU pricing is low). Another building owner mentioned a plan to install over 9 MWh of batteries into campus buildings over the next year.
In terms of lowering carbon consumption, many building owners treat BESS as an add-on or second phase of renewable energy projects. As one building owner said, “We’re not just going out and buying the battery system; it’s part of a much larger comprehensive project to add to the payback of performance contracts.”
Batteries do little to lower carbon emissions for the building owner without having the renewable energy infrastructure to charge them cleanly. For solar projects, including BESS can act as the tipping point that makes the project economically justifiable.
Regarding risk mitigation and increasing resiliency, participants discussed using BESS as a carbon-emission-friendly backup power source, often replacing dirty-burning diesel generators. This opportunity comes with risk and reward. Like an uninterruptible power supply (UPS), BESS can offer a nearly instantaneous power switchover, while a diesel generator might take a few seconds to fire up. That instantaneous switchover can differentiate between success and failure in mission-critical systems. Additionally, BESS knocks out the power quality issues that can come from an inconsistent grid or a generator. Cleaner power quality can be crucial for sensitive equipment downstream. However, if the grid is dead, and your BESS is nearing empty, there’s not much you can do, while a diesel generator just needs its tank refilled.
Despite the buffet of enticing outcomes of installing BESS, building owners will only be successful if they choose a single outcome and stick to it. As one BESS implementer put it, “The most common assumption I’m debunking for customers is that a BESS can provide energy savings and resilience when in reality it cannot do both; it can only do one or the other.”
The most straightforward takeaway from the Roundtable was that if vendors can find a way to make it easy for building owners to utilize BESS to achieve their desired outcomes, they will win. The list of hurdles for BESS implementation today is not short:
The building owner we previously mentioned, who wants to save $800,000 in utility costs, has an issue: they don’t have outdoor space to install the BESS. That means the system would have to be installed within the building. Another building owner responded, “When we talk about lithium-ion within the confines of the building, it’s not a ‘no’ but a ‘hell no’ from regulatory and fire departments.”
Fires from lithium-ion batteries typically burn hotter and longer than those from other combustible materials, which massively increases the risk. Additionally, they are not quickly extinguished with water, and battery material can cause significant environmental issues if it contaminates our water systems.
There is a common sentiment that regulatory agencies and fire marshals are way behind on what is and isn’t allowed, which can stop an indoor implementation before it starts. Additionally, insurance providers juggle risk and the unknown, creating another significant expense for the building owner.
Organizations like NY-BEST are at the forefront of sorting through all the regulatory requirements so that solutions can be approved and building owners can install BESS safely. Additionally, BESS technology vendors are pushing on the ingenuity front—flow type batteries like iron flow and vanadium redox batteries, as well as lithium-ion batteries with improved cell isolation, show signs of optimism towards inherently safer solutions.
The challenge of indoor installation is pushing most successful installations outside to the parking lot (assuming there’s any room). But that still comes with its own set of issues. The further from the building, the more losses in transmission, decreasing efficiency. These systems require even more stringent water-proofing when installed in an area exposed to the environment, and local zoning approvals may also be an issue.
Regarding the demand for lithium-ion batteries, buildings compete with just about every other industry. This, along with variable global trade tariffs and limited North American suppliers, means that most building owners expect lead times and BESS prices to continue rising. Even if you can internally sell the project and navigate the regulations, you may struggle to get your hands on the product.
Despite the long list of challenges, our Roundtable featured many experts in buying, selling, and implementing BESS. Here are some of the best practices that were shared:
Your BESS is only as efficient as your decision-making on charging/discharging allows it to be. Or, as one building owner put it, “The operation is so risky and critical to revenue. It’s not easy to time the battery operations and keep it performing optimally. It’s typically utility jurisdiction and asset type specific. For instance, if your building runs 9 to 5 vs. 24/7, you’ll have two very different charging and discharging sequences. You need to find that software person who can tell you what the right application will be for you as the building owner. I would never try to do that on my own.”
Building owners must be confident that they have a defined methodology for charging and discharging their BESS before implementation to maximize operational efficiency. Many building owners trying to save on utility bills may base this charging strategy on utility tariff schedules, but if that tariff rate changes next month, will you be ready to pivot your strategy?
Today, the status quo is that building operators will take responsibility for this charge and discharge decision-making. But this is another task on their already full plate, requiring change management and education.
One building owner said, “This, to me, screams AI. The humans are going to fail. We really need the computer to take over and get the rules in place to make the right decisions”. Yet, there doesn’t seem to be a long list of software companies successfully applying AI and machine learning specifically to charge/discharge strategies. While this is related to virtual power plant (VPP) software, there seems to be a demand for BESS-specific control. We have created a new category in The Nexus Marketplace to represent this, called Battery Storage Optimization. If you know vendors who fit the definition within our Marketplace category page, please let us know; we’d love to talk to them and get them added to this new category.
The name of the game for building owners is to reduce risk. There were two main risk mitigation strategies we heard from our experts that building owners should consider applying:
Proving the ROI on a BESS can be challenging, given all the assumptions and factors necessary for success. Many BESS implementors now offer some form of energy performance contract (EPC) that shifts the risk away from the building owner. In these projects, upfront capital is minimal for the purchaser, and payment is based on realized energy savings.
This article primarily covers behind-the-meter solutions, a.k.a. within a building owner’s premises. But in-front-of-the-meter solutions for battery energy storage are arguably further along. Power Purchase Agreements (PPAs) can give a building owner a safer way to commit to purchasing energy from a BESS system without taking on the risk of ownership or installation. While this won’t give a building owner the same autonomy over the battery charge and discharge, it can be a more straightforward path to carbon reduction.
With BESS regulations still in the wild-west phases, the best place for interested buyers to start is local. If a BESS implementor has a successful installation on the other side of the country, those same regulations, utility tariffs, zoning requirements, and insurance policies may not apply to your region. Talking with your local utility provider, consultants, and electrical contractors will enlighten you on which neighbors may have already successfully made it through the same paperwork you’ll go through. Moreover, make sure you know who will lead the charge through regulations and working with the utility company. If it’s not the BESS vendor, is a professional consultant needed to own the approval processes?
Distributed energy resources (DERs) and microgrids are the answer to affordable and clean power. No silver bullet is coming; the solution will continually grow into a more complex ecosystem of renewables and utility-provided power. Battery energy storage systems promise to be a cornerstone of this complex solution to our building energy requirements, yet the industry is clearly in its infancy.
We’re excited to continue our work to accelerate the adoption of technologies like BESS by connecting building owners and vendors. If you’re a vendor in this space who would like to share your solution with our community, contact us to be included in our upcoming BESS RFI. If you’re a buyer interested in purchasing BESS, let us know where you are in your journey.
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