Augmentation strategies to manage long-term battery degradation  

Understanding battery degradation  

All battery-based energy storage systems degrade over time, leading to a loss of capacity. As the energy storage industry grows, it’s critical that project developers proactively plan for this inevitable ‘degradation curve’. Failing to do so will not only limit potential revenues but could even jeopardise the role of energy storage as a key enabler of grid stability and, by extension, the energy transition.  

Energy storage systems that engage in heavy arbitrage are particularly prone to rapid degradation. Arbitrage strategies involve purchasing and storing energy when prices are low and selling and discharging it when the demand for energy increases.

Optimal charging and discharging intervals often run contrary to preferred arbitrage opportunities, meaning developers have limited visibility into the pace at which energy storage systems lose capacity.

Degradation rates also differ by battery type. The primary benefit of LFP battery technology is that it enables a longer lifespan compared to other lithium-ion chemistries. 

Temperatures, both hot and cold, can also have a significant effect on battery degradation.

Managing degradation through oversizing or augmentation  

Traditionally, developers have accommodated battery degradation by oversizing their installations at the initial outset of the project. This approach involves installing more battery capacity upfront than needed and typically consists of site preparation, wiring, and system integration.

The excess capacity enables developers to offset the expected degradation losses over the years, allowing them to maintain the contracted capacity over the project’s lifetime.   

A key advantage of oversizing is that it doesn’t require site mobilisation, permits, additional labour, or the commissioning of new hardware down the line.

Oversizing also enables developers to lock in capital expenditures at the project outset, mitigating future cost uncertainty and helping to improve forecasting. As the cost of lithium-ion batteries continues to fall to new lows, however, developers may lose out on significant savings by taking this approach.

Alternatively, developers may choose to offset degradation by augmenting the capacity periodically throughout the project’s lifetime. In this case, there must be extra physical space with adequate electrical configuration in the initial project layout to add new hardware. Proper planning is critical to minimise downtime and risks associated with augmentation.  

As prices continue to fall, augmentation is becoming an increasingly attractive way for developers to mitigate battery degradation and capacity loss.

It may not be right for every situation, though, as each energy storage project is unique and different augmentation strategies depend on the appetite for potential risk and reward. Still, the likelihood of further cost reductions — especially considering the already low price of lithium-ion battery technology — makes augmentation particularly alluring.  

Choosing between augmentation strategies  

There are two primary methods of augmentation — alternating current augmentation (AC) and direct current (DC) shuffling — that developers can choose between based on their system type, grid connection, and needed services.  

AC augmentation focuses on improving the interplay between the energy storage system and electrical grids, enhancing system stability, and enabling grid support functions. With AC augmentation, new physical infrastructure is added to the project, including inverters and Power Conversion Systems (PCS), which are responsible for making AC electricity usable in downstream devices like energy storage.  

Alongside the PCS, new protective enclosures are installed to house essential components, including the batteries themselves and associated safety, control, and monitoring equipment. The added capacity of AC augmentation can be installed without requiring significant modifications to existing equipment, minimising disruption. It also offers significant system flexibility, allows for incremental sizing, and presents an extremely low risk of technical complications.   

However, there are a few drawbacks associated with AC augmentation that developers should keep in mind, particularly for grid-connected energy storage systems.  

Adding new PCS equipment — while relatively straight forward from a technical standpoint — requires permitting and regulatory approval when connected to the grid. This process is cumbersome, time-consuming, and extremely complicated, slowing down the ability of developers to augment their systems. These limitations don’t impact energy storage systems that are independent from the grid, however. Islanded microgrids can forgo lengthy bureaucratic approvals, making them well-suited for AC augmentation. For grid-connected energy storage systems, DC shuffling is the more suitable augmentation strategy.  

DC shuffling prioritises the internal distribution of energy within battery stacks to ensure balanced charging and discharging of individual cells and modules, which is vital for prolonging battery lifespan and maximising overall system efficiency.  

Whereas AC augmentation primarily focuses on external interactions between energy storage systems and the grid, DC shuffling optimises energy distribution within battery stacks, delivering greater internal efficiency and resiliency.  

By reconfiguring battery enclosures from one string of batteries and transferring them equitably throughout the system, DC shuffling leads to a more balanced distribution of energy across the battery stack.  

A new string of enclosures is then introduced behind the PCS from which the existing batteries were shuffled. This addition guarantees that the overall system retains its power capacity and that the number of PCS units and the nominal power of the plant remain unchanged. This allows DC shuffling augmentation to bypass permitting and regulatory approval, as there are technically no new connections being made to the grid.   

DC shuffling also benefits from lower equipment costs relative to AC augmentation, as there’s greater repurposing of infrastructure. DC shuffling is well suited for grid-connected ESS, though it may not always be possible due to technical limitations, from auxiliary load breaker and busbar limitations to short circuit ratings. Consequently, developers must diligently evaluate the specific technical and operational aspects of their systems before deciding whether to invest in AC or DC augmentation.  

Battery degradation management will remain important into the future  

With hundreds of gigawatts worth of battery-based energy storage systems operating at a global scale, mitigating capacity losses will become a central part of managing projects for developers and integrators in the years to come.

Careful battery degradation management practices including augmentation will enable developers to drive greater performance, lower lifetime costs, and keep the renewable energy transition moving forward.  

About the author

Giriraj Rathore, in his role as the business strategy manager at Wärtsilä Energy, harnesses a blend of technical expertise and strategic acumen to drive innovation in energy storage solutions. His grasp of market trends and emerging technologies helps foster sustainable energy initiatives and paves the way for a greener, more efficient energy landscape. His educational background includes a bachelor’s degree in mechanical engineering, complemented by an MBA specialising in international business.