The BESS balancing act: don’t play it (too) safe

Battery energy storage systems (BESS) are in a category of their own in the renewable energy landscape. Unlike solar or wind, BESS isn’t a passive asset that you operate. It's a consumable financial asset: one that has to be actively managed, with careful attention to the market dynamics at play. How you manage your BESS – and how it performs as a result – is directly connected to your bottom line. 

BESS management is more than just a technical challenge 

To successfully manage BESS assets, you need to be really good at the BESS balancing act.  

BESS revenue streams have expanded beyond capacity markets. Wholesale markets, price arbitrage, and ancillary services like frequency response, reactive power, and reserve power all offer potential new sources of income.  

But to take full advantage of these new opportunities, you have to optimize the financial life and the financial returns of your BESS assets in a centralized way. 

Think of it like this: playing in multiple markets (also known as “revenue stacking”) boosts the profitability of your battery projects. However, every decision you make to extract more revenue from a BESS asset could lead to additional costs, like an increased need for augmentation, or increased load on your battery.  

Ideally, the benefits outweigh the costs. But taking it too far could impact long-term performance, resulting in lower revenues, failure to meet contractual obligations, or even accelerated asset degradation. 

On the other side, if you can successfully balance all the above, the benefits go far beyond a single battery asset. Strong performance can help you strengthen project bankability for the next investment down the road.  

It’s a lot to juggle, but even with all of that complexity, you don’t have to avoid deeper cycling or stay away from certain markets. You just need the right visibility: knowing how your battery is aging, what your warranty allows, and where to find the sweet spot between the two. 

Assessing your BESS tech stack to find the balance 

To maximize the return you’re getting on your battery energy storage system, you need asset performance management (APM) tech that allows you to manage the tradeoff between battery health and revenue generation. 

Today’s BESS tech empowers operators to take a more balanced, data-driven approach with a few key features.

1. Modeling degradation in real-time, alongside market prices

Performance declines are extremely expensive in the long term – but when carefully monitored and managed, there can be a big upside for operators playing in the wholesale market. Look for an APM that can model degradation in real-time and gives you the data you need to make those decisions.

2. Tracking warranty boundaries and asset health metrics

Warranty compliance relies on careful operation and monitoring. It’s the responsibility of asset owners and operators to maintain data at the right level to ensure that they’ve been operating within the bounds of the warranty – and can prove it. Your APM should help you ensure that your real-time decisions are protecting the performance of your battery and staying in line with your warranty performance.

3. Simulating operational scenarios based on risk profiles

Does your APM help you assess the tradeoff between revenue and degradation in different scenarios? Pushing too far in one direction could risk damage – but play it safe, and you may be leaving money on the table.  

Knowledge is power – and opportunity 

Your APM software should offer access to the data that you need – and the analysis that will help you understand how to manage your battery health while optimizing revenue generation. That’s how you can get the most out of your battery assets: by making intentional, informed decisions about how and when to push your assets and when to pull back.  

The result is more value captured, fewer surprises, and longer-term strategic alignment. Also known as: the perfect balance.