How battery storage PPPs are powering up the global energy transition

With the global energy transition underway, power systems and transport infrastructure are becoming increasingly interlinked, with battery storage at its heart. Battery energy storage systems (BESS)—energy storage systems that use batteries to store and distribute electricity—are gaining ground in providing an alternative means for grid support and ancillary and transmission-related services, such as voltage, frequency control, and grid congestion relief.

Importantly, they help mainstream non-dispatchable renewable resources such as solar and wind. Battery storage also makes it easier to sell energy back to the grid. But making intermittent renewable energy dispatchable by adapting various storage technologies is quickly evolving—adding complexity and upfront costs that the public sector alone cannot address.

More than ever, governments need to tap private sector expertise and financial resources to accelerate the smart deployment of battery storage systems. To fully benefit from the technological advances that BESS can bring to achieve a transition toward a cleaner and more sustainable future, developing markets need to embrace various forms of public-private partnerships (PPPs).

A new report offers insights on the merits of BESS and provides recommendations on contractual and revenue models that allow for the procurement of such infrastructure through PPPs. All of this and more can be found in Guidelines to Implement Battery Energy Storage Systems under Public-Private Partnership Structures, prepared by the West Africa group of the World Bank's Energy Global Practice with support from the Public-Private Infrastructure Advisory Facility (PPIAF) and the Energy Sector Management Assistance Program (ESMAP).

Some of the fundamental considerations by governments and power utilities when contemplating BESS include:

The growth in the use of BESS technology has been exponential but is mostly taking place in developed parts of the world. Why? Because there is "no route-to-market" for many of the services provided by batteries in less-developed markets , such as an alternative to expensive peaker capacity and maintaining grid stability. In essence, it's difficult for less-developed power markets to value the critical ancillary services that BESS can provide. In fact, a standalone BESS PPP aimed at supporting the stability of a national—or even regional—power system can often be considered a reliable and cheaper alternative to a publicly funded network augmentation.

The future development of BESS will include a number of innovative features, such as e-mobility and optimized electric vehicle batteries. It will use tariff structures that encourage charging when electricity is in the least demand. Combined vehicle batteries can also be used as de facto battery systems in the wider electricity market—a principle known as Vehicle-to-Grid (or V2G), providing ancillary services to power systems.

Implementing these promising BESS technologies requires support to governments on multiple fronts, including conceptualizing sophisticated power systems, defining adaptive revenue models, and structuring PPPs . The World Bank Group and PPIAF are supporting these goals through capacity building and investment support for these technologies, for example:

To find out more about powering up the clean energy transition by deploying PPPs for BESS, we hope you’ll take a look at the Guidelines to Implement BESS under PPPs.

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Senior Infrastructure Specialist

Practice Manager, Energy & Extractives Global Practice, World Bank