An Introduction to Battery Energy Storage Systems (BESS) O&M Services

 How will the Big Beautiful Bill change the outlook for battery energy storage systems (BESS)? How are maintenance and decommissioning work performed on BESS sites? In this discussion, NAES Renewables Vice President of Renewables Anne McBroom, Director of Operations Edward Trujillo, and Project Engineering Manager Frances Plourde discuss the impact of Trump's policies on the BESS industry and how O&M services can ensure reliable operation of BESS sites for years to come.

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Transcript

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Welcome to Power Bank, sponsored by NACE Renewables, where big ideas, bold conversations, and unstoppable energy collide. We're your hosts, Ann mc Broome and Francis ppl, and we're diving headfirst into everything you need to know, want to hear, and can't stop talking about in renewable energy. Let's get into it. Hello, and welcome back to another episode of the Power Bank podcast presented by NACE Renewables. My name is Frances Lrd and I'm the Project Engineering manager here on the NACE Renewables Special Projects Team. And today I'm joined by Vice President of Renewables and mc. Room and director of operations, Edward Trujillo to talk about some special topics relating to battery energy storage systems or best systems. We at NACE renewables have an extensive history in performing maintenance work on the systems, especially when it comes to what we call remove, recycle, and replace operations. So we're really excited to talk about that today with you and welcome Ann and Edward to the podcast. Thanks for having us on Princess. Wonderful. To give a bit of introduction and motivation to our discussion today, I wanted to provide a bit of an update on the best industry as it currently stands. We're recording this at the end of September in 2025, so we're about nine months into the Trump administration with all of the tariffs and trade negotiations that that has brought. And we're also a few months past the passing of the one big beautiful Bill Act, which instituted sweeping changes to the renewable energy tax credit sphere. So we've talked about this on our podcast before in a few separate discussions regarding the solar industry and the wind industry. The best industry definitely didn't escape changes to the tax credit scene compared to other aspects of the renewable industry. But some of these specifics are a bit different than solar and wind and other renewables. To provide a little bit of background as to how these renewable energy tax credits work as they were defined previously in the Inflation Reduction Act and in previous federal policy. There are two major categories of renewable energy tax credit that we're gonna be talking about. One is. Called investment tax credit or ITC, and that essentially represents a tax credit on the capital investment needed to establish renewable energy systems. So essentially the construction, the equipment itself, that's included in the investment tax credit. You also have something called a production tax credit or A PTC, and that's a tax credit on the energy that's actually being produced by those systems. So in the past, renewable energy developers and investors have been able to realize tax credits on both of these categories, both on the capital investment itself, on the construction and equipment itself, as well as the energy that those systems are being produced. And so across the renewable industry, both of these tax credits were significantly impacted by the passage of the Big Beautiful Bill, specifically in how it relates to realization of these tax credits in the future. The best industry came out a little bit ahead of the wind and solar industries when it comes to the longevity of some of these tax credits. So best projects as a whole will remain eligible for both the ITC and the PTC in some form, as long as they begin construction by 2033. At that point, after 2033, the production tax credit, the PTC will phase out by 28% each year until the end of 2035, when it will be completely phased out. The investment tax credit the ITC is now going to be specifically impacted by what is known as Fi o. This stands for Foreign Entities of Concern, which is a reference to the foreign sources of several of these components that are used in renewable energy systems. And Fi o is a concept that's going to impact the entirety of the renewables industry. As we've talked about before on the podcast, the renewables industry is particularly susceptible to Trump's targeting of foreign components supplied to the American energy industry because so much renewable energy components and equipment are produced overseas, mostly in Asia and primarily in China, which has been a target of Trump's trade policies for almost his entire administration. Fi o basically stipulates how much of foreign investment and foreign components can be used in a renewable system. This will impact the investment tax credit eligibility of those systems. So for best projects as a whole, there's a maximum of 60% of the investment on a best system that can come from a foreign entity to be eligible for the ITC. So you can't have more than 60% investment coming from a foreign entity in a best project to remain eligible for the tax credit. That percentage, that acceptable percentage reduces 5% each year until 2030. So by 2030, you're not allowed to have any foreign investment in these systems. For the battery components of those systems, that limit is 45%. So you can't have more than 45% foreign components in your battery system Additionally there is also what is known as a 10 year recapture risk. Within 10 years of claiming the investment tax credit, you can't have what are known as applicable payments to foreign entities of concern. So this would be replacement parts or any additional investment that's needed by foreign entities. Whether that's just capital investment or, replacement equipment. Replacement parts, within 10 years of claiming that tax credit. If you do need to. Have that additional level of investment from foreign entities that could risk full repayment of the tax credit that you received. This is something that a lot of people in the renewables industry are needing to pay a lot of attention to because if you need additional parts or additional capital investment from whatever foreign entities you've been working with for these systems within 10 years of the system's construction. You may end up needing to repay that tax credit if those payments need to go to a foreign entity. So that's where a lot of these discussions about new best construction have a lot of people in the industry particularly concerned. There is what's known as a safe harbor. So safe harbor in order to remove any obligation to these changes to the tax credits would mean that investors need to begin construction on these best systems by the end of 2025. So these deadlines are based on construction start date, not project completion date. A lot of investors are hoping to begin construction on these new best projects relatively soon. The problem is that because of the changes to the tax credits, the difficulties of the new, trade and tariff policies specifically with China and other producers of the majority of renewable equipment, we've already seen a significant reduction in investment in renewables as a whole, but also in best as far as construction of new systems in the United States. There's predictions that there will be a 17 gigawatt reduction in new best capacity installed in the United States by 2035. And so we're starting to see some regression in terms of the amount of best that we're starting to see installed in the United States because of this continued uncertainty in the tax policy and the tariff policy as well. This. Has the potential to drive up energy prices, and it also has the potential to really impact grid reliability. If you think about best systems, how they're being used by electric utilities, they're primarily being used to replace older gas, natural gas peaker plants that are used to kick in if there's excessive demand on the grid. For example, if it's a hot day and everybody is running their air conditioning and the existing power capacity of the grid is starting to reach its maximum capacity, peaker plants would be used to provide additional power to the grid. Now, because a lot of people are interested in renewable energy sources and moving away from conventional sources like gas, a lot of utilities are starting to use these best systems in place of a peaker plant. But if we're not seeing this rapid increase in vast installation like we have been seeing over the last several years, it could have an impact on overall grid reliability, especially in places where these systems would be used to meet new grid requirements. Anne, can you provide any additional insight into how fi o is going to impact the best industry specifically? Well, let's focus a little bit on supply chain. In section 45 X of the Inflation Reduction Act, there is a production based tax credit for us manufactured clean energy components. And so unlike I-T-C-P-T-C credits, as you mentioned earlier, which are tied to the project development 45 x. Directly incentivizes domestic manufacturing of eligible components, including those used in batteries and this el. These EL eligible items are electrode active materials, battery cells, battery modules. Critical minerals and it phases out. For full credit, available products sold before 2030. The phase down is 25% per year from 2030 to 2032, and eliminates after 2032 unless extended through future legislation. So the fi o implications beginning in 2024 on these components. The critical minerals, specifically 45 x cannot be claimed if the product contains input sourced from a foreign entity of concern. And that's where the fiat comes in. It's specifically, so how does this really affect our supply chain? Lithium, one of the main components in batteries at the moment and there's alternatives, on the horizon, but at the moment, this is, the impact is lithium is 70% of refining capacity. Is located in China. Graphite is 90% of anode grade graphite processing, and that comes from China. Cobalt mining comes from the Democratic Republic of Congo with Chinese firms dominating that, refining and BMS and electronics. Many are produced in Chinese controlled companies. China is listed as. A entity, a foreign entity of concern. They're subject to the Department of Energy and Treasury. Implications for the supply chains under fi o. So the industry implications for this project developers, EPCs. They must perform supply chain audits and obtain certificates of origin for components, OEMs, they, accelerating efforts to localize manufacturing in the US and allied countries and, with the allied countries and anything that is imported to the United States, we have the tariff issue. So it really doesn't solve the problem, sourcing through allied countries. Yes, the tariffs are, less impactful, but they're still there and they are still increasing prices. With regard to financiers, we're increasingly required Fiat compliance documentation as part of due diligence and basically the risk is non-compliance. And it may reduce project IRR by 30 to 40% due to loss of IRA tax credits, which are the P-T-C-I-T-C credits that you mentioned in combination with the 45 x credit. So these are significant impacts to the battery storage industry. And I've spoken with colleagues regarding what they're seeing thus far and they're saying that they're, look, since many of the IPPs and EPCs have stockpiled materials and equipment, they're seeing more of the impact. Later in 2026, toward the end of 2026. So I guess this remains to be seen where we're headed and how we can offset the tariffs and the implications of fi o toward the battery storage industry. Thank you so much, Anne. That was a really great explanation of some of the history behind these topics. It's definitely one of those things where there's so many components that go into this policy that the United States has and then the impacts that that will have on our industry. So as we've been talking about some of the challenges facing new best construction, the next conversation begins to be, how do we make existing best systems work more efficiently for longer periods of time? This will. Enable existing systems to extend their longevity and their efficiency over time and allow for site owners and investors to be able to. Reduce the amount that they're dependent upon ever-changing policy and supply chain issues and be able to use existing systems that they already have. I wanna throw this over to our Director of Operations, Edward Trujillo, who can give an overview of some of the projects that we've worked on in the past and how NACE renewables, technicians and engineers have specifically addressed issues of best system operations and increasing system longevity. Thank you, Francis. So in the industry, what we're seeing is a significant change. I believe and spoke about different types of systems and what we're learning is. Basically cross training of different types of systems. And this goes into not only an engineering team or battery storage engineers, but also battery storage technicians. And a lot has to go into training for these different levels systems and training. So I looped back into training, but it is crucial that we train these individuals properly. We have systems that are spread out throughout the Midwest and a lot of these. Battery energy storage technicians also can work on, different foldable take systems as well. So in order to do that, we have these flexible technicians that can go and troubleshoot battery energy storage, but also can work on, PV systems to get to that point. It takes a significant amount of training to get them to understand how battery and storage works, how to troubleshoot, from the bottom up. That does get into preventive and corrective maintenance on each system. Now we have different types of battery energy storage systems. There's electrolyte batteries. There's, lithium, which is the majority of the systems out there. I believe it's 85%. And how do you address that? How do you address these systems if you don't know what troubles each system has. So significant training with battery energy storage engineers is critical at this time to really get the cross training that we need. In preventive maintenance, a lot of it is not standardized. From what I've noticed in the industry, we have different types of, electrical connections, different types of cooling systems, what type of maintenance goes into these systems as well. Additionally, to safety. Each battery energy storage system. I know some systems, like a battery energy storage container. If you have to get inside of it, what kind of safety protocols are being called out? If you have to get inside a container and say an event happens where you know the air is unbreathable and something does, smolder or catch on fire. Looking into just that simple step is significant training and it has to be certified, with engineers that know the systems, that know the dangers, and what kind of first aging it on top of that. Second, secondly is the preventive maintenance. Where are all your electrical connections? Some are internal, some are external. And how do you address these? Are you doing it semi-annually? Are you doing it annually? And also what I've seen, a change in the type of preventive maintenance is using thermography, to look at all the electrical connections and doing that will ensure that you are doing them correctly. Also that you don't have any loose connections which are causing overheating, which could lead to a thermal event. Because once you have a thermal event, especially in a lithium system, it's just a runaway, basically you just have to get out of the area and let it do what it's gonna do. Of course, you can shut down the systems, but, you still have a takeoff from that point. So training is gonna be substantial in the next couple of years. I see a lot of new systems coming into play for battery energy storage. I've heard of a molten salt rock battery that's coming into the market within the next year. And how does that affect battery energy storage technicians and battery energy storage engineers that are out there. Not only that, battery energy storage engineers know how to collect a lot of data effectively for troubleshooting these systems. And, balancing. Looking at the SOC upon, delivery of power. This is very time consuming and not a lot of systems track these issues. BMS will either shut down a string and say there's a problem, but effectively you have to go back through the data. Now that kind of troubleshooting. Really has to be taught. And one thing that we are doing, or we'd like to implement in the new type of training system is training battery energy storage technicians with battery energy storage engineers to look at the data to sense where the problem is,, and then. See what, which modules having issues and how long has this issue been happening. You can track the data for weeks or months at a time to see which string module is having the issue. So you see a lot of that. Also, communications for these systems is. Is turning into a lot of fiber optics and which is great, because you get real time data, quickly. And that's one thing that. If you don't have the fiber optic system in place, it is really difficult to track some of the data and of the polling that happens. Sometimes these things poll, 50 times a second. Sometimes it's more than that, thousands of times a second, which is, just overloaded with data, which. I don't believe you need that much data or that quickly. But in order to do a rapid shutdown, you need this collection of data. So it is a vast amount of data and I believe AI is gonna play a crucial part in looking at that data finding which modules are defective or having issues. So you can create an effective plan of maintenance or, replacing the modules. Some of the other things that I do see is larger batteries that are coming into play into these battery energy storage systems. Now what that does is it gives you. More stable power on a bigger unit. But replacing these batteries, these things could be 12, 1500 pounds. Effectively how do you replace something that large, with the minimal amount of technicians or battery storage engineers, some of these systems are on gravel. Some of these systems are in the dirt, they're on stands. So a lot of the change in the industry is some of the equipment that I'm seeing that's being created to address these things specifically. Then when you're designing these systems, does it allow enough space? In between each battery energy storage container to allow these, heavy machinery to get in between the battery storage units. So there's a lot to think about with new systems coming in. As far as addressing preventative and corrective maintenance, engineers don't always have the proper thought. So when designing these systems, we do like to, and this is something I've worked with other companies on, you want to get the full scope, so you want to talk with battery, energy storage, technicians, engineers. You also wanna look at the space, you wanna see how it's laid out. Because that could be critical. You could build the system. And then you have these issues where you can't do preventative or corrective maintenance, which is very interesting. The other side of that is they're starting to stack these battery energy storage, containers on top of each other. And how do you get into maintenance with those? When you have a double stack, you have a 1200 pound battery. And that's gonna be a challenge, especially for new equipment that has to be designed to address these things in the field and what kind of safety goes into that. So there's a hu there's a lot of factors when you're looking into, maintaining, these systems. And that goes into decommissioning as well. What kind of safety protocols are you taking? You have to ensure zero energy, but is the battery energy storage unit at zero energy? And how can you verify that? You can do live dead live testing? You have to ensure that, the SOC is. Close to zero. But if you're having, problems with the system in general and you can't get it to, zero or at least down to 20%, then you have to do,, live work, and that goes into, what kind of safety documentation does your company have. That's critical as well. Especially when you're detaching. Each module, what kind of safety protocols is going into that? What kind of equipment are you using? So there's just so many factors that you really have to look at when you're looking at maintaining a system. But also do you have the safety protocols in place and the proper knowledge to maintain these systems. There, there's a lot of factors and we can really dive into each sector of that, if you like, but that's just an overall kind of where the industry is going at this time. Thank you very much for that overview. I think that really shows the complexity of these issues, especially, what interested me about what you just said was. The differences between all of these systems, how each best system is really unique. And I, that's a, that's something that we've talked about on the podcast before in terms of challenges when it comes to. Module and inverter replacements and how there's been very little push to standardization in the industry so far. Hopefully in the future we'll see a little bit more standardization in terms of components and size and weight, as you said. So this sets us up nicely for the next thing I wanted to talk about. As we've spoken on the podcast before, one project that our team really specializes in is what we call, remove, recycle, and replace projects. So as a quick overview from when we discussed this on the solar side of things, that would involve full removal of the modules on site. Coordinating for them to be recycled or disposed of properly, and then full replacement of the modules onsite, which includes what we've talked about in terms of module replacement, investigations, and relevant field work. Can you talk about what these projects look like when performed on a best system? How remove, recycle and replace projects occur for best systems, and maybe share some stories of previous projects that our team has worked on. We've done, several battery d coms and it does go into, it depends if they're totally removing the system or if they're looking to replace the system with a better system. When that happens, what you're seeing in the industry is a battery energy storage system has, a series one or a first test out, energy container. Then they come out with a version two, which is significantly better, so they wanna get this installed. It has the same parameters, I'm sure engineering looks at all the power, input, and output. That's on the backend before this, the energy storage unit gets in place. But when you're there, the things to consider while you're. Going to put in a new system is, does the same wiring, have to be installed? Are you upgrading the communication systems? Where are your shutdowns?, Usually this is done in a POI and you really have to take the proper steps to ensure zero energy that's being connected to your battery energy storage system. On top of that, you're looking at. Significant lift plans for, dcom. These energy storage units are very heavy. Some of them come in sections where you have to take out a section at a time, and get that into recycle. What kind of recycling costs are you looking at? To remove this system and get it recycled. There's a lot that goes into just decommissioning, planning, coordination of trucks, coordination of cranes. Many times you'll have to use cranes to move these things onto these different size trucks. And securing those. Ensuring that you have the proper recycling that fits, within the recycling requirements. So there's a lot that goes into. Decommissioning, but boots on the ground, you have to ensure that these needs are being done in correct stages., Getting with your team on a daily basis, ensuring that each step for safety is being done and then moving forward from there. Is a critical part. Not only that, but you're staying on budget, that you're not going over budget for removing and recycling these systems. I believe a lot more goes into a solar repower or remove replace than a battery energy storage unit. You still have to have those critical steps for deene, but a lot more engineering goes into, a solar repower than a battery energy storage container removal, replace. But it's still critical for safety that you ensure that you're doing everything safely, properly, and these things, are de-energized. I think that's the biggest part. When you're looking at de decommissioning, a better energy storage system is ensuring zero energy. And some at times you, you can't do that. You just have to proceed with the proper safety precautions if they are energized. That's a critical part, ensuring. The last data you get is correct, but working with battery energy storage engineers to ensure that all safety precautions, all energy is, completely zero. So big steps that you need to take for that specifically. Thank you for that description, Edward. And something that I've been thinking about as you've been describing how this maintenance work proceeds in best systems is that to my understanding, when best systems are constructed, they have a certain amount of budget that's built into their, cost models and their production models to accommodate, preventative and corrective maintenance on these systems as they age and as they need work and repair. Can you comment on how that process works in terms of some of the projects that we've been talking about and how those. Can be incorporated into existing, projections for maintenance work, but then also serve to increase production capacity and revenue in these systems. Yes. When we're looking at an overall budget for preventative and corrective maintenance, I believe they're inserted into every contract and also warranty program. What that does ensure for the customer that these systems are running for so many years at a time, without being down for so long. Certain systems do require more attention than others. From what I've seen, some companies do send out these systems without, being commissioned or being, how do you say, broken in. And so you, that turns the field service team into kind of a Guinea pig where they have to commission the system. They have to condition. This system and what happens is you'll see where the system is down for a significant amount of time and you have to jump into warranty phase where you have to replace 90% of the modules at times, or it is significantly conditioned and you have zero. Issues besides, preventive maintenance, connections, things like that. So it really does depend on the system and the systems you're buying. A lot of systems come with a good track record and you can follow that, through the trends of how many people are buying the systems or what you see out there in the field. It is dependent on the system. But a lot goes into, preventative and corrective maintenance, ensuring that those systems are correctly maintained. Especially the cooling systems. You have a lot of these lithium systems that use glycol. How often does that have to be addressed? That's part of preventive maintenance. But if you have a leaking system, you have to go out there more times to address the cooling systems because you're having overheating, which would in turn cause a runaway fire. It's all about the data that you're seeing, the heating, while you're discharging is when you're gonna see the most significant amount of problems. So how are you tracking that? How are you ensuring that the system is being cooled correctly? Some have HVAC systems where. Cools the entire unit. But how often those filters have to be changed. So really it's a significant amount of the budget, I believe that goes into maintaining these systems and assuring that it's gonna last for years and years. But it is dependent on the type of system that you have. A lot of different systems have different cooling apparatus. So maintaining those cooling systems is critical for these lithium systems. Absolutely, and I think that's something that can also be really dependent on the environment. I think of best systems that are out here where I live in Arizona. Not only do they have to accommodate for the cooling needs of the system itself, but then also just the ambient cooling needed for a system that's out in 120 degree temperatures for a third of the year. And so that's where I think design needs to be very cognizant of the deployment environment of these systems as well. To wrap up our conversation today, I wanted to see if you could maybe share some stories, from real life experiences that you've had or that our team has had in some of these, either decommissioning or remove, remove, recycle, replace projects, what prompted them, how they came about, and then how the team executed them. What we saw out on one particular battery storage, remove, restore project was that. The first generation Tesla system was located in direct proximity to an a, a, probably a 20 foot nitrogen tank. And the system was designed around the exterior of the battery storage, unit assembly and the crane operations. We're required to remove the battery storage units without any interruption to the nitrogen system, which was part of a bloom installation. And it was a complex removal. With regard to the crane operations. It was also in a narrow roadway, which required shorter. Flatbeds to remove the units. So the crane had limited space to maneuver these battery storage units onto the flatbeds, and we worked diligently with the crane company to make sure that safety was, we were compliant with safety rules and regulations. The crane weight would not compromise the underground water system that was directly in front of the battery storage unit. It was overall probably one of the most complex removals we've done. And this was in California. And there were strict rules and Thank you, Francis. Have a great day. Thanks, you too. regulations regarding the recycle of the project and also the transport of the project. So there's a lot that goes into removing these facilities. It's not just disconnecting wires, it's. Logistics, it's safety, it's materials, it's government compliance. There's so much to the entire project, and that's what makes it crucial for companies wishing to remove these facilities to reach out to us because we understand the dynamics of the removal of these facilities. Definitely, I think our team is really uniquely qualified to address these issues, at all levels and with all levels of complexity involved. Thank you Anne and Edward so much for being on the podcast today. If you are going to be attending the upcoming Solar Plaza best conference in Houston this coming week, October 2nd, anne and Edward will be there. Edward will actually be on a panel, sharing some of these insights and his experience in working with these systems. If you're going to be there, please send us an email at Power bank@nace.com and we'd love to meet up with you there at the conference. If you have any questions about the topics that we discuss today or if you have any service needs or wanna get in touch with us again, please send us an email at Power bank@nace.com and we'd love to get in touch with you. Thank you so much Thank you, Francis. Thank you so much for joining us on today's episode of The Power Bank, sponsored by NACE Renewables. If you have any questions regarding the topic of our discussion today, or you would like to reach out to us about special projects we would absolutely love to talk with you. You can send us an email at Power bank@nace.com. Thank you and keep powering on.