Battery Energy Storage System (BESS): How It Works and What Software It Needs

A battery energy storage system (BESS) is a comprehensive setup that stores electricity and makes it available when required. This system comprises a set of batteries, a power conversion system, a battery management system, and an energy management system. A noteworthy development is the surge in BESS capacity, with 108 GW newly added in 2025, marking a 40% increase from the previous year.

The International Energy Agency (IEA) reported this figure in its Global Energy Review 2026, which also notes that around 87 GW of this capacity is utility-scale, with the remaining 21 GW installed at the customer or household level. China contributed the most, adding over 63 GW, followed by the United States with 19 GW and Europe with 6.2 GW.

Despite Europe's total being slightly lower than in 2024, its utility-scale additions more than doubled to approximately 4.6 GW. This growth in BESS capacity surpassed the historical record for annual gas-fired capacity additions, which reached about 107 GW in 2002. The primary purpose of installing BESS is to manage surplus renewable energy, as discussed in our article on the subject.

Two key ratings for a BESS are often misunderstood: power, measured in megawatts (MW), and capacity, measured in megawatt-hours (MWh). Power indicates how quickly the system can charge or discharge, while capacity reveals the amount of energy the system can store. The relationship between capacity and power can be used to determine the duration of discharge; for instance, a 2 MW battery with 4 MWh of capacity can discharge at full power for approximately two hours.

The average duration of projects commissioned in 2025 was about three hours, up from around two hours in 2023, with a growing number of projects offering durations of four hours or more.

The operation of a BESS follows a loop, which includes taking alternating current (AC) power from the grid or a solar plant, converting it to direct current (DC) to charge the cells, and then converting it back to AC when discharging. The power conversion system (PCS) handles these conversions in both directions. Each component within this loop has a specific role: the battery management system (BMS) monitors the cells, ensuring their voltage, temperature, and state of charge (SoC) remain within safe limits; the energy management system (EMS) decides when to charge, discharge, and at what power, based on factors such as prices, site load, grid operator requests, and BMS reports; and the PCS carries out the EMS setpoint and manages the actual flow of power. Most systems also provide an operating mode that can be manually switched.

The main components of a BESS include battery cells organized into modules and racks, a container or enclosure, the PCS, the BMS, the EMS, energy meters, and a Supervisory Control and Data Acquisition (SCADA) system along with a communication layer. The term "BESS battery" typically refers to the cells and racks. The cells are assembled into modules, and modules into racks, forming the structure visible in photos of a BESS.

Utility-scale systems often ship in containers equipped with racks, fire protection, and HVAC systems to maintain optimal cell temperatures. The PCS, responsible for converting AC to DC and back, and executing the power setpoint, is a crucial component. The BMS safeguards the cells and reports their state, while the EMS manages the charge and discharge decisions for the entire site.

Energy meters measure the site's, solar plant's, and battery's production and consumption, with the EMS only able to control what it can measure. The EMS requires energy meters for data collection, display, and command passing between the site, the cloud, and the grid operator.

Lithium iron phosphate (LFP) cells dominate new BESS projects, accounting for about 90% of deployments, according to the IEA Global Energy Review 2026. This is in stark contrast to five years prior, when LFP's share was well below 50%. LFP cells are less energy-dense than those commonly used in electric vehicles but are cheaper and better suited for frequent cycling, making them ideal for daily BESS cycles.

The cost of these batteries has plummeted by over 90% since 2010. While battery management systems (BMS), energy management systems (EMS), and supervisory control and data acquisition (SCADA) systems each have distinct functions, the BMS protects the cells, the PCS moves the power, the EMS decides on charge and discharge actions, and SCADA allows people to monitor and supervise all aspects of the BESS.

These layers operate on different time scales and are often supplied by various manufacturers, necessitating thoughtful interface design and testing.