Behind-The-Meter Battery Energy Storage: NREL
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ENERGY STORAGE TOOLKIT
Behind-The-Meter
Battery Energy Storage:
Frequently Asked Questions
What Is Behind-The-Meter BESS refers to customer-sited stationary system (e.g., utility-scale storage systems),
Battery Energy Storage? storage systems that are connected to the in many ways, including who owns the
distribution system on the customer’s side systems, where they are installed, and
Energy storage broadly refers to any
of the utility’s service meter.1 BTM BESS, the size and number of systems installed.
technology that enables power system
along with DG and other grid assets These characteristics influence the role of
operators, utilities, developers, or
deployed at the distribution level, are BTM BESS on the grid. Figure 2 outlines
customers to store energy for later use. A
broadly referred to as distributed energy a few key characteristics of BTM BESS
battery energy storage system (BESS) is
resources (DERs). Figure 1 provides and how they impact the integration of
an electrochemical device that charges or
some examples of DER (including a BTM BESS into the power system.
collects energy from the grid or a distrib-
BTM BESS) that are increasingly being
uted generation (DG) system and then As of the time of this writing, the primary
deployed in power systems around the
discharges that energy later to provide cost-effective battery chemistry available
world as technology costs decline and
electricity or other services when needed. for BTM applications is lithium-ion.2 The
customer interest grows.
BESS can provide grid and customer trend toward lithium-ion has been driven,
services, acting as both a load (while BTM BESS differ from front-of-the-meter in part, by steep price declines in the price
charging) and a generation asset (while storage systems, both interconnected at the of lithium-ion technologies—over 89%
discharging). Behind-the-meter (BTM) distribution system and the transmission from 2010 to 2020—with further price
Figure 1. A selection of DERs customers can deploy BTM in combination with, or apart from, distributed solar photovoltaics (PV)
Source: (O’Shaughnessy et al. 2017). Note: This report only covers BTM battery energy storage, although it can interact with other DERs.
1. Customer-sited, off-grid battery storage systems, which are not connected to the grid, are not covered in this fact sheet. Additionally, while electric vehicles can act as BTM storage
systems and provide services to the customer and power system, this fact sheet does not cover them.
2. For additional information on various technology options for energy storage, see Kim et al. (2018).
www.greeningthegrid.org | www.nrel.gov/usaid-partnership
Behind-The-Meter Battery Energy Storage: Frequently Asked Questions 2
VISIBILITY:
SITING AND OPERATION:
SIZE AND QUANTITY: System operators and utilities have
Utility-scale systems are sited and
BTM systems have smaller limited visibility into the BTM system
dispatched to meet power system
capacities, but there operation (i.e. they only see the
needs. BTM systems are installed and
are more of them. difference between customer demand
operated to meet customer needs.
and storage operation).
PROBLEM: PROBLEM: PROBLEM:
This complicates their integration as Customer needs are not necessarily This can impact planning exercises
utilities struggle to process applications. aligned with power system needs. and regular operating practices.
SOLUTION: SOLUTION: SOLUTION:
Well-designed interconnection Well-designed compensation Well-designed interconnection
processes can help streamline this mechanisms and other policy requirements can ensure sufficient
process while ensuring they do not instruments can help align interests, metering and telemetry equipment
negatively impact the power system. ensuring BTM systems are deployed installed to help utilities; however, the
and operated to benefit all power burden these requirements can
system stakeholders. represent for installing customers
should be carefully considered.
Figure 2. Unique characteristics of BTM BESS, resulting issues, and solutions
declines anticipated (Frith 2020).3 These reductions, improving energy resilience, more information, see “Compensation
price declines, in turn, have spurred a and mitigating power quality. For addi- Mechanisms for BTM Storage.”
growing interest in the adoption of BTM tional information, see Zinaman Additionally, depending on the presence
BESS and the implications of integrating et al. (2020). of utility or third-party programs,
BTM BESS into power system operations. customers may be interested in
Customer Bill Savings: investing in BTM BESS and granting
This fact sheet provides a brief overview BTM BESS is often paired other power system stakeholders access
of stationary BTM BESS. with DG to reduce energy to their systems in exchange for payments
bills and/or enhance (see “What Emerging Business Models
Why Do Customers compensation. Bill Can Support BTM BESS Deployment?”).
Adopt BTM BESS? reduction is primarily achieved through
demand charge reduction (lowering the Customer Reliability
BTM BESS adoption is mainly influenced
maximum power consumed, typically and Resiliency: Customers
by customer decisions, as the systems are
per month) and energy arbitrage (shifting may be interested in having
installed on customer premises, provide
electricity consumption from high to reliable access to power
savings or other benefits to the customers,
low energy cost periods). The ability of after a disruption to the
and customers are typically the principal
customers to reduce their bills depends grid, particularly if these interruptions
investors in the system. The primary
on what a customer pays for electricity occur relatively frequently or the customer
drivers for customer adoption of BTM
(the retail tariff rate) and what they faces steep consequences for interruption
BESS to date are opportunities for bill
are paid for exports (the sell rate). For in supply (e.g., a hospital) (Anderson
3. Note that this figure only refers to battery pack prices, which represent only a portion of total energy storage system costs. Additional cost categories include labor for installation,
additional monitoring and telemetry equipment, and developer overhead to fund customer outreach and advertising programs.Behind-The-Meter Battery Energy Storage: Frequently Asked Questions 3
et al. 2019; Elgqvist forthcoming). be indirectly encouraged through price load (charging). In Hawaii, a virtual
Continuous cost declines in renewable signals. In South Australia, a virtual power power plant comprising BTM BESS and
DG and energy storage have made them plant pilot project is under development other DER is planned to help provide
a viable alternative and/or complement to aggregate 1,000 BTM BESS to act as frequency support to the grid, including
to traditional diesel generators because a single 5-MW power plant. In addition fast frequency response. These services
they can reduce the size of the diesel to providing services to customers, this are expected to become more critical as
generator needed, do not rely on fixed fuel virtual power plant will be used to perform the small island grid transitions to higher
supplies, and can generate revenue while energy arbitrage in the wholesale market, levels of renewable energy in line with its
the grid is operational. Customers may benefiting retailers, and help meet peak 100% target (HECO and OATI 2019).
become increasingly interested in resilient demand, benefiting system operators
solutions as climate change increases the (AGL Energy Limited 2018). Transmission and Distribution Upgrade
frequency and intensity of natural disasters Deferral: Just as system operators need
such as flooding and tropical storms, Ancillary services: The supply and to ensure sufficient generating capacity to
causing increasing interruptions to demand of energy must be carefully meet demand in all hours of the year, there
the utility grid (Fried, Hellmuth, and balanced to maintain the safe operation of must also be sufficient transmission and
Potter 2019). the power system. To account for fluctua- distribution capacity to deliver that power.
tions in the demand and supply of energy, As the loads on the utility grid grow, a
Customer Power Quality: system operators procure a wide array of utility may need to upgrade the distribu-
Many customers, in partic- ancillary services on timescales ranging tion and transmission system capacity.
ular industrial customers, from milliseconds to several minutes Energy storage can defer the need for
rely on an uninterrupted (Denholm et al. 2020). Energy storage additional transmission or distribution
supply of high-quality technologies such as lithium-ion batteries capacity investments by charging during
power. These industries, such as semi- are well-suited to provide ancillary low-demand periods and discharging to
conductor manufacturers, may be willing services as they: (1) react exceedingly meet local demand during high-demand
to invest in BTM BESS to ensure power quickly and accurately to signals, and periods, essentially reducing the power
from the grid within very tight voltage or (2) can switch from being sources of that must be transmitted from centralized
frequency tolerances. generation (discharging) to sources of resources during traditional periods of grid
Can BTM BESS Provide
Power System Services? Text Box 1. Enabling Power System Services From BTM BESS
In addition to the “customer-facing”
Although BTM BESS can provide a wide variety of services to the power system,
services described previously, BTM BESS
enabling these may require additional infrastructure, more complex operating
has the potential to provide a wide range
practices, and changes to compensation mechanisms. “Implicit” approaches
of additional services to other power such as using retail tariffs to incentivize certain behaviors may require more
system stakeholders. The following is a advanced metering infrastructure and additional administrative oversight, as
nonexhaustive list of services that BTM well as customer education programs, to enable and encourage customer
BESS can provide to utilities and power participation. More “explicit” approaches such as directly dispatching DER, either
system operators. While technically through aggregators or directly by utilities and power system operators, may
capable of providing these services, addi- require additional metering, telemetry infrastructure, cybersecurity considerations,
tional steps may be necessary to tap into and operational changes to ensure safe and reliable procurement of services
this potential (see Text Box 1). For a more from BTM BESS. This additional metering or communication infrastructure, while
in-depth description of these services, critical for service provision, may increase the price of the storage system beyond
see Bowen et al. (2019) or Denholm what a customer can afford.
et al. (2019).
In New York, the transmission system operator is developing a “Dual Participation”
model that will allow DERs such as BTM BESS to provide services to customers,
Energy and Capacity: BTM BESS
utilities, and the wholesale energy market. The model attempts to address issues
can provide both energy and peaking
related to: (1) ensuring bulk power system reliability; (2) ensuring appropriate
capacity services by discharging stored
visibility into DER operation for all parties; (3) ensuring the DER has access to
energy either from an associated DG
the most value streams possible; (4) preventing double payment for services;
system or imported earlier from the grid.
and (5) “coincidence” (when a DER is contracted to provide conflicting services to
Encouraging BTM BESS to perform multiple entities in the same time period) (Lavillotti 2019). These rules will ensure
energy arbitrage or provide peaking customers can pursue value through both on-site services (bill reductions, backup
capacity may rely on explicit signals power) and revenues through markets.
from power system operators or mayBehind-The-Meter Battery Energy Storage: Frequently Asked Questions 4
congestion. As BTM BESS are located on
the distribution system, they are uniquely Text Box 2. Net Metering vs. Net Billing for Energy Storage Systems
suited to providing distribution deferral
Two common frameworks for compensation mechanisms for electricity exported
services. Faced with a potential $1.2
to the grid include net energy metering and net billing, both of which have different
billion distribution upgrade, the New York
impacts on the relative benefits of pairing storage with DG.
utility ConEdison opted instead to defer
the upgrade by relying on a portfolio of Under net energy metering, customers receive bill credits for electricity exports in
investments, including customer-sited excess of on-site consumption. These credits can be used to offset consumption
BTM storage, to reduce demand and from the grid in the current or future billing cycles. In this way, the power system
remain within existing infrastructure itself acts as a form of financial energy storage, and, as such, net energy metering
capacity limits (Schwabe, Statwick, and is unlikely to incentivize the pairing of BTM storage with DG.
Tian 2018). The use of a broad set of Under net billing, customers are compensated for electricity exports at a
nontraditional investments, such as DG, predetermined sell rate, while paying for consumption from the power system at
BTM BESS, demand response, or energy their normal retail tariff rate. The ratio of the sell rate and the retail tariff rate plays
efficiency, to offset the need for traditional an important role in whether storage is incentivized. If the sell rate is lower than
transmission and distribution investments the retail tariff rate (as is typically the case), customers pay more for consumption
is known as non-wire alternatives. from the grid than they are rewarded for exports to the grid. This encourages
customers to avoid consumption from the grid when possible by storing excess
How Can Power System generation from DG for use at a later time, therefore incentivizing pairing their DG
system with BTM BESS.
Decision Makers Encourage
the Adoption of BTM BESS? For more information on the impact of compensation mechanisms on BTM BESS,
see Zinaman et al. (2020).
Policymakers, regulators, and other power
system stakeholders may be interested in
encouraging the adoption and influencing
the operation of BTM BESS, either in the California Public Utilities Commission Power offered financial assistance with
interest of policy priorities (e.g., customer (CPUC) established mandatory energy purchasing BTM BESS in exchange for
choice or decarbonization efforts) or as a storage targets for systems connected to limited control during certain hours of the
means of providing valuable power system the transmission system and distribution year, allowing the utility to reduce oper-
services. Customers, however, will adopt system, both behind and in front of ating expenses (Green Mountain Power
and operate storage to match their own customers’ meters (CPUC 2013). These 2021b). Existing financial incentives for
energy needs or objectives, which may goals, whether mandatory or aspirational, DG can also be expanded to include BTM
or may not be aligned with the broader can send a clear message to developers BESS, either paired with DG or in stand-
needs of the power system. Fortunately, and customers on the long-term support alone systems.
there are several tools available to help for BTM storage, potentially bolstering
nascent markets. Compensation Mechanisms for BTM
align the interests of customers and other BESS: Compensation mechanisms
power system stakeholders, including Financial Incentives for BTM BESS: govern: (1) what power flows between
goal setting, financial incentives, and Providing financial incentives, such the customer, the DER system, and the
compensation mechanisms. These offer a as low-interest loans, grants, or tax power system are allowed, tracked,
powerful means for directing the adoption credits, can drive targeted adoption of and billed; (2) the rate customers pay
and operation of BTM BESS to contribute BTM BESS among specific regions and for purchasing electricity from the
to power system objectives. customer classes, particularly if there is a power system; and (3) the rate at which
Setting Goals for BTM BESS: concern that BTM BESS is out of reach customers are rewarded for electricity
Policymakers, regulators, and utilities may for low-income customers. For instance, sold back to the power system (Zinaman
be interested in increasing the presence California regulators expanded financial et al. 2017). Compensation mechanisms
of BTM storage on the grid, particularly assistance for BTM BESS for under- can be designed to reward exports by and
among certain customer classes or in privileged customers in areas prone to incentivize the adoption of DG and are
certain regions. Existing targets for wildfires as part of their broader mission in some jurisdictions being expanded to
utility-scale storage, if present, can be to promote energy resilience and equity include DG plus BTM BESS (Zinaman,
modified to include specific targets for (CPUC 2020). Incentives can also come Bowen, and Aznar 2020). Choices around
BTM storage. For instance, in response with conditions to ensure that BTM BESS the design of compensation mechanisms
to directives from policymakers to are being operated in ways that benefit can influence whether customers are
increase the presence of energy storage multiple power system stakeholders. likely to pair energy storage with DG
in line with environmental objectives, the For instance, the utility Green Mountain (see Text Box 2).Behind-The-Meter Battery Energy Storage: Frequently Asked Questions 5
Some jurisdictions are introducing more BTM BESS to interconnect that are likely which help ensure interconnecting systems
complex retail tariff elements into their to cause issues. The three categories of are capable of appropriately reacting to
compensation mechanisms, like time- rules outlined below can help jurisdictions power system conditions, as well as cover
of-use rates or demand charges. These safely and efficiently interconnect BTM other important elements for DER such
elements can be more likely to incentivize BESS while ensuring interconnecting as communication and cybersecurity
pairing BTM BESS with DG, as complex systems are capable of meeting power protocols. Additional standards specific
rates often offer more opportunities for system objectives. Many of the same rules to energy storage are currently under
customers to reduce their bills with BTM and approaches already used to safely development.
BESS relative to flat volumetric rates and reliably integrate other DERs like
alone. Such complex tariff elements also distributed PV can also be implemented Technical review processes govern how
help to align DER operation and consump- for BTM BESS. systems are reviewed for their potential
tion with power system needs. However, impact on the grid by the utility before
these benefits must be weighed against the Application processing determines the being allowed to interconnect. Some
increased effort to administer such tariffs, information customers and developers regulators have allowed for expedited
as well as a customer’s ability to reason- must provide the utility to submit a review processes in constrained portions
ably respond to additional complexity. complete application and how the utility of the grid if the developer or customer
must handle these applications once agrees to limit discharging back to the grid
received. Finding ways to automate or (e.g., Hawaii’s Customer Self Supply tariff
How Can Decision Makers
streamline the application process can help option (HECO 2019)). Well-designed
Promote the Efficient, Safe, utilities make the most of their limited technical review processes help utilities
and Reliable Interconnection resources and ensure a relatively painless prioritize additional review for systems
of BTM BESS? experience for adopting customers, most likely to cause issues, while allowing
Interconnection is the process of safely removing a stumbling block for the accelerated interconnections for systems
and reliably integrating a given DER into growth of BTM BESS and other DERs. unlikely to cause issues. This streamlined
the broader power system. Poor intercon- process can enable the adoption of
nection procedures can act as a barrier Grid requirements dictate the storage and help utilities use their limited
to DER like BTM BESS by either: (1) behavior and capabilities of equipment resources more efficiently (Horowitz et al.
presenting customers and developers with interconnecting to the power system, 2019).
opaque and difficult-to-navigate appli- typically through model equipment and
cation processes; (2) requiring too much interconnection standards developed
What Are Some Key Safety
effort on behalf of the utility to process by international bodies. Two important
standards for DER such as BTM BESS
Issues Surrounding BTM
applications, leading to long delays for BESS?
customers and developers; or (3) allowing are IEEE 1547-2018 and UL 1741 SA,
As BTM BESS are sited on customer
premises, it is important for these systems
to operate safely. Two critical safety
Text Box 3. Ensuring Safety for BTM BESS concerns for storage systems include
The New York State Energy Research and Development Authority (NYSERDA) unintentional islanding and, for lithi-
has developed a set of guidelines for reviewing and evaluating BESS, which rely um-ion batteries that make up the majority
on utilizing codes, standards, and training. This includes guidance on the adoption of new BTM BESS installations, thermal
of legislation and regulations for safe and reliable adoption of BESS, permitting runaway.
considerations for residential and small commercial BESS, and an inspection
checklist for code enforcement officers or third-party inspectors. In 2020, the New Unintentional islanding refers to
York State Uniform Fire Prevention and Building Code, which outlines the required instances in which energy stored in the
statewide guidelines for building construction and fire prevention, was modified to BTM BESS re-energizes a portion of the
include the latest safety considerations for energy storage systems (NYSERDA distribution network without the knowl-
2020). edge of utilities. This can delay service
restoration, damage utility equipment,
Given the dense urban areas in New York, building-related requirements are
provided for both “occupied” and “unoccupied” areas to minimize fire and chemical
and pose hazards to utility workers who
hazards to occupants and also minimize the conditions under which fires occur, assume a segment of the grid is not
including ensuring adequate ventilation to prevent any gas and air buildup around energized (Enayati 2018). Although rare,
modules, which can lead to fires (Gokhale-Welch and Stout 2021). In combination unintentional islanding can happen if an
with existing codes, regulations, and industry standards, these provisions help energy storage system (or a distributed
ensure the safe permitting, siting, and deployment of BESS. PV system) continues to export power to
the grid during an outage. Many technicalBehind-The-Meter Battery Energy Storage: Frequently Asked Questions 6
requirements (e.g., IEEE 1547–2018)
now stipulate specific measures to detect Recommended BTM BESS inspection procedures and frequency
and prevent unintentional islanding,
Fire detection and suppression systems
while explicitly allowing for intentional
islanding, such as BTM systems providing Firefighting measures posted on-site
energy to a critical section of the grid
during a major outage (e.g., in a microgrid Emergency stop protocol
application). Ventilation
Thermal runaway refers to a process Siting considerations
unique to electrochemical energy storage
systems in which the temperatures within Signage with 1-2-3 stepwise procedures for potential issues
the storage system increase to a critical such as leaked fluid, off-gassing, damaged container, etc.
point beyond which internal chemical
reactions create a self-sustaining process Figure 3. Select examples of safety measures and considerations for BTM BESS
of heat generation that can ultimately lead
to fires or an explosion. Thermal runaway Customers may ultimately be less inter- utilities or developers pay for access to a
is especially a concern for lithium-ion ested in ownership of an energy storage customer’s energy storage system during
batteries, and this danger can be system than accessing the services that periods where the storage system would
compounded in BTM BESS that may be energy storage can provide to them (such otherwise be unutilized.
housed in dense urban areas and may not as backup power). Such customers may
not have the means or desire to invest in a The utility Green Mountain Power in
come equipped with the same extensive
storage system but would be willing to pay Vermont utilized both of these business
fire suppression equipment as utility-scale
a small addition to their normal electricity models when looking to reduce its demand
systems. Technical standards governing
bills in exchange for specific services charges from the transmission system
the testing, installation, operation, and
like accessing stored power during operator (Green Mountain Power 2021b;
maintenance of these systems can help to
grid outages. Additionally, utilities and 2021a). It offered to pay customers with
mitigate such safety issues (e.g., NFPA
developers typically have better access existing storage systems and to subsidize
855 in the U.S.). See Text Box 3 for infor-
to capital to invest in energy storage storage purchases for customers interested
mation on how New York state has sought
systems, and they would also be interested in storage, in exchange for using those
to approach safety considerations for
in having access to other services energy BTM assets during system peaks each
energy storage systems. Figure 3 shows
storage can provide when not servicing month. When not used by the utility,
example safety measures for BTM BESS
customers. Under energy-storage-as-a- customers could use storage to help
installations that can be implemented to
service business models, developers or lower their utility bills and during system
reduce the risk of fire and other hazards.
utilities own and operate BTM BESS in outages.
exchange for paying the upfront costs
What Emerging Business Additional business models have evolved
of the storage system. Customers, in
Models Can Support BTM to utilize BTM BESS for the provision
exchange for regular monthly payments,
BESS Deployment? of power system services. Although
will have access to the services of the
individual systems may have unutilized
BTM BESS’s high upfront capital costs energy storage system for the rest of the
capacity, customers often do not have
combined with its ability to provide a time, using the system to reduce bills or
the sophistication or scale to offer their
wide-ranging set of services to many power critical loads during grid outages.
services to markets or power system oper-
different power system stakeholders has
Alternatively, customers may invest in ators. Virtual power plants have evolved
prompted the development of business
energy storage but only use a fraction of to aggregate these systems on behalf of
models that allow different actors to share
the energy storage’s capabilities (e.g., such customers and coordinate them to act
in the benefits and costs of these systems.
using it to reduce demand charges during as a single plant (see Figure 4). Although
The process of pursuing multiple value
a billing cycle or for backup service provi- barriers and questions still exist (see Text
streams from a power system asset at
sion). In these cases, customers may be Box 4), such business models can help
different times and on different timescales
interested in allowing other stakeholders the power system operate more efficiently
is referred to as “value-stacking.” Value-
access to the storage system when they are and improve the coordination between
stacking can be important for assets such
not using it, in exchange for reduced bills transmission and distribution system oper-
as energy storage to help recoup the high
or regular payments. Under bring-your- ators while yielding additional financial
upfront capital investments required.
own-device (BYOD) business models, benefits for customers. Aggregation can
happen across broad swaths of the powerBehind-The-Meter Battery Energy Storage: Frequently Asked Questions 7
Virtual Power Plant Utility Grid
BTM Storage FTM Storage
Figure 4. Illustrative example of virtual power plant aggregation
sector, such as when providing energy, and monitoring BTM BESS. These can be manner. Additional barriers include poor
peaking capacity, or frequency services, or addressed through solid interconnection performance, inadequate communication
can be concentrated to specific regions in practices, which can allow utilities infrastructure, and insufficient cyberse-
the power sector experiencing issues, such to quickly process applications while curity for the BTM BESS (see this fact
as in non-wire alternative applications. ensuring BTM BESS behave in a reliable sheet for more information on DERs
What Are Important Barriers
to Address for BTM BESS? Text Box 4. BTM BESS and Aggregation Barriers
As a relatively new energy asset, a critical Many more BTM systems must be coordinated and dispatched to provide
barrier for the widespread adoption of equivalent levels of services relative to utility-scale systems. Aggregation is the
BTM BESS is its high costs, which process of combining multiple smaller assets to act as a larger asset for the
may prevent it from being cost-effective provision of specific power system services. Such aggregation can be important
for many customers. As technological for extending access to additional sources of value for BTM BESS, particularly for
innovations continue and manufacturing system services to utilities and power system operators.
capacity increases globally, these BESS
Aggregation of DER, such as BTM BESS and DG, is a fairly new concept; best
costs are expected to decline. However,
practices for rules governing DER are still being developed. Such rules might
despite these cost declines and the many bar or enable aggregations of DER: (1) in different locations within the power
opportunities BTM BESS affords, key system; (2) of different technology/types; and (3) of different ownership types.
technical, regulatory, and financial barriers Stakeholders should work together closely to determine what sorts of restrictions
can continue to impede the development of DER aggregation are important to enforce, which may depend on both the local
of a BTM BESS market. Addressing these power system context as well as the service being provided.
barriers can enable customers to deploy
Under FERC Order 2222, regulators in the United States have attempted to
BTM BESS sooner while ensuring bene-
expand the role of BTM assets (including storage) on the power system (FERC
fits to multiple power system stakeholders.
2020). This regulation directs market operators to offer participation models for
Technical barriers include difficulties in aggregated resources that allow the BTM assets to provide all power system
adequately interconnecting, coordinating, services of which they are technically capable.Behind-The-Meter Battery Energy Storage: Frequently Asked Questions 8
and cybersecurity). These issues can be customer assets may need to be replaced customers and developers when deciding
addressed by ensuring compliance with sooner (NREL 2021). to deploy BTM BESS. Similarly, storage
up-to-date grid requirements. Utilities may in effect be barred from providing
and regulators can and often do make Poor installations, or use of uncertified system services due to language or rules
compliance with such requirements equipment, can also hamper system designed for more traditional assets such
a precondition for interconnection. performance and prevent it from as conventional generators. Developing
Adequate communication infrastructure adequately providing services to either rules and regulations in a technology-ag-
is particularly important for jurisdictions customers or the power system. This can nostic manner (or updating existing rules)
looking to provide services to the power impact adopting customers by not meeting can help ensure that new DER like BTM
system with BTM BESS. See Section 6 of expected performance and reducing BESS can equally provide and be compen-
Zinaman et al. (2020) for a more in-depth revenues or bill savings they might have sated for all system services of which they
discussion on the role of interconnection anticipated. This can also impact the are technically capable (Bhatnagar et al.
practices and grid requirements in power system if it leads to reliability 2013).
ensuring DER capabilities. or safety issues. If quality concerns are
pervasive in a given market, it can lower Financial barriers involve those that
An additional concern for BTM BESS investor confidence and create a poor make financing for BTM BESS difficult
owners is degradation, which refers to a reputation for BTM BESS, impacting for adopting customers. Financing can
wide range of mechanisms and processes future market development. Regulators be critical for the adoption of BTM
that can affect BESS performance over can help the development of a BTM BESS BESS given its high capital costs. This
its lifetime. Degradation occurs in all market by providing customers, investors, is a particularly relevant barrier if power
energy assets, including all types of and utilities with quality assurance system objectives involve encouraging
energy storage, solar PV, and others. through regulations aimed at ensuring a the adoption of BTM BESS among
Degradation in battery chemistries, minimum standard for the installations, particular customer classes such as among
including lithium-ion, can have a wide performance, and safety of any equipment low-income customers. While the issue
variety of physical and chemical causes that is allowed to interconnect.4 of upfront capital can be addressed in part
that are still under investigation. While by access to loans and other incentives,
all energy assets will degrade over their Regulatory barriers primarily take the alternative or complementary approaches
lifetimes, the rate of degradation for BESS form of ambiguity in the applicability can include incentivizing novel business
is influenced by several factors, including of existing rules or incentives. Existing models that help various power system
the temperature in which it is operating, incentives or rules for DERs can often stakeholders share the costs and benefits
operating windows, and charging and be expanded with minor modifications to of BTM BESS. These can include
discharging rates (Edge et al. 2021). include stand-alone BTM BESS or BTM third-party, or utility-owned and -operated
Lithium-ion BESS can typically last 10 BESS coupled with DG systems. Clearly BTM storage. An additional barrier for
years with minor impact on performance; including BTM BESS in such rules and customers considering pairing BTM BESS
however, depending on these factors, regulations can help reduce uncertainty for with solar PV installations is the two
Figure 5. Lithium-ion battery recycling process from electric vehicles
4. For an overview of how quality concerns around DER can impact market outcomes and how system stakeholders can address these concerns, see Karandikar et al. (2020). Although this
report refers specifically to distributed solar PV, many of its lessons and approaches can be broadly applied to BTM storage as well.Behind-The-Meter Battery Energy Storage: Frequently Asked Questions 9
technologies’ different lifespans, with • Developing a set of similar or uniform as batteries that are no longer sufficient
solar PV lasting in excess of 25 years designs for lithium-ion batteries can for transportation applications may still
and BTM BESS lifespans closer to 10 drastically simplify the recycling be able to adequately function in BTM
years. This requires customers to plan process, and batteries should be roles for many years before service quality
for replacing the BTM BESS within the designed with ease of disassembly deteriorates.
paired system’s lifetime. in mind.
References
• Similar or uniform designs can aid
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Written by Thomas Bowen and Carishma Gokhale-Welch, National Renewable Energy Laboratory
www.greeningthegrid.org | www.nrel.gov/usaid-partnership
This work was authored, in part, by the National The Energy Storage Toolkit offers curated resources and guidance on integrating commercially avail-
Renewable Energy Laboratory (NREL), operated by able energy storage technologies into the power system.
Alliance for Sustainable Energy, LLC, for the U.S.
Department of Energy (DOE) under Contract No. The USAID-NREL Partnership addresses critical challenges to scaling up advanced energy systems
DE-AC36-08GO28308. Funding provided by the United through global tools and technical assistance, including the Renewable Energy Data Explorer, Greening
States Agency for International Development (USAID) the Grid, the International Jobs and Economic Development Impacts tool, and the Resilient Energy
under Contract No. IAG-17-2050. The views expressed Platform. More information can be found at: www.nrel.gov/usaid-partnership.
in this report do not necessarily represent the views
of the DOE or the U.S. Government, or any agency
thereof, including USAID.
NREL/TP-7A40-79393 | August 2021
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