Spotlight: Battery Energy Storage Systems (BESS)

What role does BESS play in supporting the UK energy transition?

Battery storage plays a key part in managing a renewables-led electricity grid. As more wind and solar capacity is added, there are bigger gaps between when energy is produced and when it is needed. BESS helps to manage that imbalance by storing power during periods of high generation and supplying it when renewable resource wanes. It also supports grid stability through frequency response. In many ways, BESS is the tool that makes large-scale renewable integration possible.

NESO’s Clean Power 2030 plan, sets a target of 23-27 GW of battery storage capacity to be built by 2030 to ensure the grid can operate efficiently as renewable generation continues to expand.¹

The importance of storage can already be seen in regions with high renewable penetration. Let’s take the case of Scotland. The combination of strong levels of wind and limited transmission capacity to the South creates periods of excess generation which leads to energy curtailment. In the first half of 2025, Northern Scotland experienced over 4 TWh of lost wind power, accounting for 86% of total UK curtailment.² Batteries offer the potential to capture energy that would otherwise be wasted. Additionally, some curtailed generators are reimbursed for their lost revenue. In reducing curtailment, batteries thus save the grid operators, and ultimately consumers, money as well.

Why is Scotland well positioned for battery storage development?

High levels of price volatility in the region create strong incentives to locate flexible solutions nearby. This makes Scotland an attractive environment for battery storage, as the technology can respond quickly to shifts in supply and demand and capture value from balancing and ancillary services.

Policy developments in Scotland are supporting long-term growth of the sector. The Scottish Government’s National Planning Framework 4 identifies energy storage as essential to meeting net-zero targets.³

Scotland also has the physical space to support large-scale energy infrastructure. With fewer land-use pressures and more suitable sites than many parts of England, it can accommodate grid-scale battery project developments more easily.

How close is the UK to meeting its 2030 storage capacity targets?

There’s a sizeable gap to close. Hitting the CP2030 target of 27.1 GW in operational BESS by 2030 would require building roughly 4.3 GW per year, whereas only approximately 2 GW was commissioned in 2025 ⁴. This gap is not due to a lack of planned projects. In fact, there is a significant volume of BESS already consented and in the pipeline.⁵

However, many of those projects are facing delays due to grid connection constraints⁶. This issue affects all parts of the UK’s energy system across both transmission and distribution zones.

In other words, progress is being made, but the build-rate would have to accelerate materially to reach the 2030 goal.

How have battery storage assets evolved in recent years?

Perhaps the most transformative change has been cost reduction. According to the International Renewable Energy Agency (IRENA), the fully installed cost of BESS has fallen by around 93% between 2010 and 2024.⁷ This sharp decline reflects improvements in lithium-ion manufacturing⁸ and more efficient project design⁹. Alongside lower capital costs, project contracts now frequently include longer performance warranties, indicating technological improvements and increased confidence from BESS manufacturers.

Safety standards have also improved significantly. Earlier systems were more vulnerable to thermal runaway and fire incidents, making safety a critical focus. Today, BESS modules often comply with rigorous testing such as UL 9540A, which is designed to safeguard from fire risk. Fire safety tests are now conducted at the most granular level (individual cells) all the way through to entire battery containers.¹⁰ Project design has adapted in parallel, incorporating greater spacing between containers and improved fire suppression systems to prevent propagation. These measures have reduced operational risk.
Another improvement is the increase in the energy density of projects. Leading manufacturers have doubled or tripled the storage capacity of single container units: Trina’s Elementa 2 system, for example, offers up to 4 MWh¹¹ compared to 2 MWh in its predecessor¹². This allows developers to make more efficient use of land, a critical factor in constrained or high-value areas.

This increase in energy density facilitates systems that can now store energy for longer durations, extending discharge times. This allows renewable electricity to be stored and released across multiple demand periods, reducing the number of individual projects required to manage surplus generation.

What trends are shaping offtake strategies in the sector?

BESS assets can stack multiple revenue streams to optimise returns. Aside from wholesale market trading, they can earn revenue from ancillary services, such as frequency response and the suite of Dynamic Response Services. Additional value can come from capacity market payments, balancing mechanism participation, and constraint management, particularly in regions with limited transmission capacity. Recent reforms by the National Energy System Operator (NESO) are widening access to the Balancing Mechanism, enabling BESS to participate more effectively.¹³ This is a key market for both BESS and NESO. It offers the former wider market access and the latter greater supply of participants in the market it uses to balance final supply and demand. Having flexible generation, with quick ramp up times helping balance final supply and demand, should reduce NESO’s expenditure servicing this market, something that has been growing significantly in recent years.¹⁴

As the market is maturing, offtake strategies have also evolved. In the early years, most BESS projects relied heavily on frequency response markets. While this offered strong revenues from limited cycling, these markets had finite capacity and were eventually saturated. More recently, and with the trend towards longer duration systems, batteries are focusing on trading in wholesale electricity markets, gaining greater merchant exposure. While this offers strong upside potential, it also increases projects’ exposure to merchant risk driven by electricity price volatility. Today, assets can tailor their exposure to market risk through a variety of contractual arrangements with optimisers, including tolling agreements, and floor agreements.¹⁵ Participants can combine these mechanisms to build offtake structures aligned to their individual risk appetites.