Battery Storage: An Emerging Opportunity

This article was originally published on Renewables Now.

Battery storage technologies play an increasingly critical role in supporting the transition to clean energy, offering solutions to challenges posed by intermittent renewable resources. These technologies not only enhance grid stability and reliability but also provide valuable economic benefits to commercial and industrial customers aiming to optimize energy consumption, improve efficiency, and achieve sustainability goals.

Renewables developers have pursued a strategy of incorporating battery storage into wind and solar projects for some time, seeking to capture potential upside by shifting generation to more valuable hours of the day while claiming the Investment Tax Credit (ITC). Increasingly, large energy users such as data centers are also incorporating battery storage to improve reliability, reduce demand charges, and lessen dependence on fossil-fuel-fired backup power. In some cases, batteries have even helped new data centers accelerate interconnection timelines by allowing them to reduce apparent peak load or operate at a lower initial grid‑capacity commitment, improving utility approval prospects and alleviating local distribution‑grid constraints.

While the One Big Beautiful Bill Act (OBBBA), enacted in July 2025, had significant impact on the tax credit landscape for clean energy, it largely preserved the Section 48E ITC for standalone battery energy storage systems (BESS) as provided in the Inflation Reduction Act (IRA) of 2022. BESS projects that begin construction before 2033 remain eligible for the full credit, making the next seven years a critical period for BESS commercialization and procurement.

Battery technologies

Several commercially viable battery storage technologies are currently available, each suited for different use cases.

 Lithium-ion (Li-ion) batteries are particularly effective in applications like frequency regulation, peak shaving, and renewable energy integration. Their compact size, high cycle efficiency (around 85-95%), and low cost make them ideal for commercial and industrial settings. Li-ion batteries have shorter durations, typically ranging from one to four hours, making them suitable for shorter-duration storage needs.

Flow batteries, especially vanadium redox flow batteries (VRB), offer significant advantages in longer-duration storage, often supporting four to eight-hour discharge cycles or more. Their modular design allows separation between energy and power, providing scalability and adaptability to varying energy demands without degradation in performance over numerous cycles, though at a higher upfront cost. Flow batteries’ long-duration storage capabilities may present advantages where over four hours of energy storage is necessary. 

Sodium-sulfur batteries are commonly used at grid scale due to their capability to store large amounts of energy over extended discharge durations. These batteries function at high operating temperatures (~300°C), making operations and maintenance complex. However, their high capacity, long discharge duration, and efficient operation can make them beneficial for utilities or large commercial operations.

Lead-acid batteries are among the oldest and most proven battery technologies. They provide a reliable and low-cost solution for short-duration storage and are primarily employed for backup power applications and off-grid energy systems. Despite limitations in energy density, lifespan, and cycling efficiency compared to newer technologies, lead-acid batteries are still attractive due to their lower upfront costs and established recycling infrastructure.

Commercial applications 

For commercial and industrial customers installing renewable energy systems onsite, lithium-ion batteries have become the preferred choice due to their flexibility, relatively lower capital costs, and ease of integration with solar or wind systems. By combining onsite generation with Li-ion battery storage, businesses can significantly reduce peak demand charges, optimize energy consumption to align with time-of-use electricity pricing, and increase resilience through backup power capabilities. For facilities requiring more extensive storage duration, flow batteries may present a more suitable investment despite their higher initial capital investment, thanks to their extended lifecycle and capacity retention.

Offsite clean energy buyers entering into vPPAs may also see significant benefits from integrating battery storage technology. Battery storage integrated with utility-scale renewable energy projects can help stabilize generation profiles, improve reliability, and create opportunities to optimize the economics of renewable energy contracts. In a vPPA, battery storage enhances dispatchability, reducing exposure to market volatility and potentially increasing project revenues through participation in ancillary service markets. Batteries allow producers to better manage intermittent generation and align renewable output with high-demand periods, potentially improving the project’s financial performance and reducing the risk of negative price exposure in fixed-for-floating contracts. 

Additionally, battery storage solutions offer substantial grid-level benefits, including improved grid resilience, capacity support during peak demand periods, and deferral of investments in traditional transmission and distribution infrastructure. This indirectly benefits commercial buyers through improved reliability and reduced exposure to grid disruptions or volatility in energy costs at their corporate facilities. 

In conclusion, lithium-ion batteries remain the predominant choice for most commercial energy storage applications due to their versatility, efficiency, and affordability. However, alternative technologies such as flow batteries and sodium-sulfur systems offer targeted advantages in specialized scenarios. 

Understanding these distinctions enables both onsite and offsite clean energy buyers to select the most suitable battery storage technologies, optimizing their energy usage, enhancing renewable integration, and maximizing economic returns in alignment with their clean energy goals. Additionally, corporate buyers engaging in vPPAs may gain direct benefits in reduction of basis risk, as batteries smooth pricing fluctuations and stabilize generation profiles.

Bio: Evan Dell’Olio serves as Senior Manager, Clean Energy Origination at Trio, advising corporate and industrial clients on commercial energy matters. He specializes in the structuring and negotiation of power purchase agreements, including both physical and virtual transactions across North America.