Energy Storage: Unlocking the Power Behind the Transition

Energy storage is often misunderstood in its role within the energy ecosystem. Unlike generation technologies, storage doesn't produce electricity; rather, it performs vital functions that add flexibility, reliability and value to energy systems. A useful analogy is that of a day trader - buying low and selling high. Storage systems charge when electricity is cheapest and discharge when it's most valuable. Yet, this transactional model only scratches the surface of the broader benefits energy storage can deliver.

Beyond arbitrage, storage ensures business continuity during blackouts, supports grid stability, balances intermittent renewable generation, and offers ancillary services that are difficult to quantify financially. Due to this array of use cases, modern energy storage systems must be built with flexibility and sustainability in mind, capable of evolving alongside shifting regulatory, market frameworks and technological conditions.

Battery Energy Storage Systems (BESS): Leading the Charge

Battery energy storage, particularly lithium-ion batteries, currently dominates the market. Lithium-ion technology is widely used in electric vehicles and consumer electronics, prized for its energy density and efficiency. Despite sustainability concerns linked to lithium mining and the challenges of recycling, this technology remains the market’s most balanced option in terms of cost, performance, and sustainability.

Sodium-ion batteries are offering a compelling alternative. Made from more abundant materials, sodium-ion technology eliminates the need for critical or controversial metals like cobalt. In China, sodium-ion is already being deployed in both EVs and grid-scale applications. One such installation, a 10 MWh energy station, is expected to expand to 100 MWh, enough to supply electricity to 35,000 residents and reduce carbon emissions by 50,000 tons. While sodium-ion batteries currently lag slightly behind lithium in terms of performance, their safety, cost potential, and abundance may make them highly competitive as production scales.

Nickel-zinc batteries also show promise in niche applications like data centers. These batteries boast high energy density and safety but currently deliver lower power output compared to lithium-ion options. Similarly, lithium iron phosphate (LFP) batteries, now used in over 80% of new BESS installations are known for their thermal stability and long life. However, their flat voltage curve complicates State-of-Charge (SoC) estimation, which can impact revenue. According to research from Accure and Modo Energy, a 10% error in SoC can reduce BESS revenue by hundreds of thousands annually. Predictive analytics are being developed to mitigate this issue without the need for hardware changes.

Debunking Myths in Battery Storage

Several persistent myths about battery energy storage continue to distort market expectations. A common misconception is that a battery’s cycle life translates directly to its calendar lifespan. In reality, lithium-ion batteries age from the moment they are manufactured due to chemical degradation, regardless of usage. Calendar aging often ends a battery’s life well before it reaches its cycle limit.

Another myth is that battery degradation is linear. In practice, performance declines exponentially in later stages, often necessitating early retirement at 70 - 80% capacity to avoid safety issues like internal short circuits. This also undercuts the viability of using second-life EV batteries for grid storage, a strategy touted for its sustainability but fraught with unpredictability and risk.

Long-Duration and Flow Battery Technologies

Flow batteries represent a fundamentally different approach. Unlike conventional batteries, they store energy in liquid electrolytes housed in external tanks. This decouples energy capacity from power output, allowing systems to scale efficiently. Their design enables deep discharges, long lifespans, and minimal fire risk.

In the Netherlands, AquaBattery uses saltwater-based electrolytes to create a safe and scalable flow battery system, targeting low-cost and long-duration storage. Vanadium redox flow batteries, zinc-bromine batteries, and novel systems such as the zinc–cerium and polysulfide-bromine variants are being explored for grid-scale storage, offering sustainability through recyclability and non-toxic materials.

Emerging players like StorTera are developing Alkali Sulfur Liquid Batteries (SLIQ), which promise to eliminate rare earth dependencies and offer low-carbon, long-duration storage solutions. These technologies can hold energy from hours to months and are being tailored for industrial processes, peaker plants, and even off-grid agricultural operations.

Beyond Batteries: Other Scalable Storage Innovations

Solid-state batteries (SSBs) are gaining attention for their high energy density and safety profile. Research institutions like the Faraday Institution are pushing the boundaries of solid-state technology to deliver recyclable and environmentally friendly solutions.

Hydrostor’s adiabatic compressed air energy storage (A-CAES) technology is another promising entrant in long-duration storage. Using air and water to store energy, Hydrostor has commissioned a utility-scale facility in Ontario and is developing large projects in the U.S. and Australia. These systems can provide eight hours or more of storage, ideal for integrating intermittent renewable energy into the grid.

Thermal energy storage (TES) systems aim to decarbonize industrial heat processes, which account for nearly half of global emissions. TES technologies can store heat at temperatures from sub-zero to 2,400°C for periods ranging from hours to months. According to the LDES Council, TES could expand long-duration storage capacity by 2 - 8 terawatts by 2040, potentially unlocking circa £400 billion ($540 billion) in system savings annually.

Gravity-Based and Pumped Hydro Systems

Pumped hydro remains the world’s most established form of energy storage, storing over 9,000 GWh of electricity globally. Massive projects like China’s Fengning facility and the UK's proposed Coire Glas project are set to more than double national storage capacities. These systems provide crucial grid resilience by balancing variable renewable generation with demand.

UK-based Gravitricity is developing gravity-based storage solutions using repurposed mine shafts to raise and lower heavy weights, mimicking pumped hydro but with potentially faster response times and a smaller geographic footprint.

Data Centers: Energy Consumers to Grid Assets

Traditionally viewed as energy-hungry infrastructure, data centers are now emerging as unlikely heroes in the push for a more flexible and resilient grid. The exponential growth of artificial intelligence, cloud computing, and digital services has made data centers one of the fastest-growing sources of electricity demand. Yet, with the right design and incentives, these digital hubs can also become active participants in grid stabilization and energy storage.

Many hyperscale data centers already operate with advanced battery systems, typically lithium-ion or increasingly, nickel-zinc for uninterrupted power supply (UPS). Historically, these batteries were only used during outages, sitting idle most of the time. However, a paradigm shift is underway: forward-thinking operators are now repurposing these batteries to provide ancillary services to the grid, such as frequency regulation, demand response and peak shaving.

By aggregating and coordinating their on-site energy assets, data centers can act as virtual power plants, balancing grid fluctuations in real time. Google has already piloted this approach in Belgium, turning its data center batteries into grid resources that support local energy stability. Microsoft has similarly explored integrating data centers with grid services, testing hydrogen fuel cells as backup power and exploring thermal energy storage at its campuses.

Moreover, as new data centers are built closer to renewable generation sites, or even directly co-located with solar and wind farms. They present a unique opportunity to act as both energy consumers and buffers. By shifting computing loads based on energy availability (a practice known as "energy-aware scheduling"), data centers can help absorb excess renewable generation or reduce demand during stress periods, mitigating curtailment and lowering grid strain.

The rise of AI accelerates this need. AI training models can require gigawatt-hours of electricity per run, meaning the sector’s sustainability depends not just on sourcing clean power, but on using it intelligently. Coupled with grid-connected battery systems and predictive energy management, data centers are becoming critical nodes in increasingly decentralised and dynamic energy systems.

Scaling Energy Storage: The Path Ahead

The International Energy Agency (IEA) projects that battery storage must grow sixfold to reach 1,500 GW of global capacity by 2030. This monumental target is not only technologically challenging but also financially and politically complex. Unlike solar panels, which are relatively simple and unidirectional, energy storage systems are bidirectional and chemically reactive, with nuanced performance variables and a diversity of stakeholders.

Financial models for storage remain risky and overcomplicated, as evidenced by the 75% failure rate in a public Australian battery trial. Regulatory hurdles, performance uncertainties, and unrealistic expectations about battery reuse continue to slow progress. Industry-wide standards, like the UK's proposed GC0117 compliance rule, could help bring consistency but will also raise the bar for technological and operational performance.

Conclusion: Toward a Flexible and Resilient Future

Among the technologies explored, lithium-ion remains dominant today due to its maturity and integrated supply chain. However, sodium-ion batteries, flow batteries, and long-duration systems like A-CAES and TES are rapidly evolving and show the greatest promise for future scalability, sustainability, and resilience.

As nations pursue their net-zero goals, scalable energy storage will be the linchpin of success. The ability to store energy reliably and economically across hours, days, or even seasons is essential for transitioning to a renewable-powered grid. To meet this challenge, the industry must invest not just in the hardware, but also in smarter analytics, flexible business models, and resilient infrastructure that together will power the energy systems of tomorrow.

Consultation, regulation and AI as an enabler and accelerator

AI can be an enabler and accelerator of the transition to a circular economy, where AI technologies can be applied to three key aspects of a circular economy: design circular products, components and materials, operate circular business models and optimise infrastructure, to ensure circular flows of products and materials.

Creating greater awareness and understanding of how AI can support a circular economy is essential to encourage applications in design, business models, and infrastructure.

At BSI, we supply AI technology solutions and offer options for hosting systems in sustainable 100% renewable powered data centres.