The Pros and Cons of Utility-scale Battery Storage

Written by Dr. Lars Schernikau on August 24, 2025. Posted in Current News

My first moped when I was fourteen, back in East Berlin, had no starter battery. The only way to get it running was to kickstart it which, back then, seemed perfectly normal. Batteries were expensive and heavy.

My current modern motorcycle (apologies to the Harley owners, because as a German I ride a BMW ) has a battery powerful enough to drive it in reverse and operate a complex control and entertainment system.

Batteries have evolved, they have become better, more efficient, safer, and lasting longer, and today entire cars run on batteries for hundreds of kilometers. But it doesn’t stop there.

The expansion of grid-scale (or utility-scale) batteries for providing grid storage especially for solar is one of the “hottest” topics of the “energy transition” these days. For instance, many provinces in China still have the mandatory requirement that solar projects are to include battery storage. There is no doubt that utility-scale batteries have many benefits, but let’s honestly consider what batteries do to our environment and to the net energy efficiency.

It is therefore high time that we explore the capabilities and short-comings of grid-scale batteries, the production thereof and the impact they have on our energy systems.

Please note, that although the principal concepts are similar if not the same, the focus of this article is on utility-scale batteries and less so on home battery systems nor on electric vehicle batteries (EVs).

In the recent past, batteries were mostly useful for starting engines and powering our home gadgets. To-date, the energy sector already accounts for over 90% of annual lithium-ion battery demand, where 10 years ago, when the market was 10x smaller, it was a mere 50%.

The topic of large battery systems is a complex one, which I, and many others, could write a book or two about.  In my blog today, let me summarize some of, what I believe to be the key points in this regard.

Buckle up as the batteries of your phones or computers keep your screens bright and readable.

Ps: I will have a more detailed discussion in the Appendix, in order to make the article more readable and shorter. Sources and abbreviations used, as usually, are given under “Links and Resources”

“Electricity is difficult to store”…. A true statement, but IT IS POSSIBLE to store electricity as all of us can confirm with our phones and laptops on a daily basis. Technology can do wonders and with sufficient money, energy, raw materials, human ingenuity, and land space we can literally reach for the stars.

However, let me illustrate to you how difficult it is to store energy in the form of electricity. Despite the recent drop in power storage costs, storing electricity remains 100-1000x more expensive than storing energy in the form of coal, oil, or gas [2]. Transporting electricity is “only” about 10-50x more expensive than transporting energy in the form of coal, oil, or gas (Desantis 2021, [3]). I feel this worth exploring, so let’s dive deeper into it!

Upfront an important note on power (MW) and energy (MWh) [4]:  Electricity systems are often quoted in terms of their power – the amount of energy delivered per second, measured in MW or kW. 

However, a 400 MW gas-fired power station is very different to a 400 MW battery energy storage system (short BESS). So long as there is fuel available, the gas turbine can deliver 400 MW almost continuously, apart from occasional downtime to allow for maintenance. This is not the case for a BESS, which can only deliver its rated power (MW) for a short time, because the total amount of energy (MWh) it can supply is severely limited. 

Therefore, battery capacity measured in MWh is more relevant (Figure 3). A typical 400 MW BESS is assumed to operate for 4 hours before exhaustion, so its capacity would be 1600 MWh. 

Another note: all abbreviations are at the end of the document under Links and Resources

As batteries become cheaper, weight and longevity are often sacrificed in order to optimize production costs. The lifetime estimate stated here, may appear to be underestimated, but real life rarely follows desk-based-research results.

85% roundtrip efficiency was mentioned by NREL 2024 [4] based on Cole and Karmakar 2023 and by many other institutions. However, the commonly cited 85% round-trip efficiency (RTE) figure for utility-scale batteries is idealized, reflecting DC-to-DC cell-level efficiency under lab conditions, not system-level performance in real-world grid deployments. When including conversion losses, thermal management (i.e. cooling), power for controlling, communication, lighting, ventilation, as well as transformer losses and wiring the reality of grid-scale battery round-trip efficiency (RTE) is closer to 70%. Either way, in this simple analysis here, I did not adjust for this.

Lithium-ion (LFP and NMC) manufacturer warranties often cite 10-15 years or 3000-6000 cycles.

• Real-world data (e.g., PG&E, Tesla Megapack, Fluence systems) show calendar life closer to 10-13 years, with accelerated aging in hot or poorly managed installations.
• High-DoD (Depth of Discharge) cycling, as is typical in “renewables” shifting, reduces usable life significantly.
• NMC batteries show even faster degradation due to higher internal resistance growth and greater sensitivity to heat and high-current cycling.
• Some systems require partial mid-life module replacement after 5–7 years, a growing trend for Li-ion BESS in hot regions.

Energy density (energy per unit of weight) is a very important subject when it comes to EV batteries, but it is less critical for stationary utility-scale battery storage, leading to a significant shift towards LFP – Lithium Iron Phosphate for BESS. See section 5 for more information on energy density.

Other battery technologies: Sodium-ion is still too new for validated degradation models. Lab tests show promise, but until multi-year utility-scale datasets are public and estimates remain speculative. In Japan and the Middle East, Sodium-Sulfur (NaS) has shown a 15-20 year lifespan, under highly specialized, controlled operations. Flow batteries live up to their cycling claims, but the electrical and pumping systems may need overhauling after 10-15 years, thus operation and maintenance costs are often underestimated.

Avoiding discussing battery chemistry in detail here, let it suffice to say that lithium-ion batteries still dominate both EV and utility-scale storage applications. Chemistry can be adapted to mineral availability and price, demonstrated by the market share for lithium iron phosphate (LFP) batteries rising to 40% of EV sales and to 80+% of new utility-scale or standard battery storage [6]. The table in Figure 4 summarizes different battery technologies highlighting what is mostly used for utility-scale batteries: LFP and NMC Lithium-ion battery systems. For fun and for comparison, I added coal.

Fyi, Nickel-iron batteries, also known as NiFe batteries or Edison batteries, are a rugged, long-lasting rechargeable battery technology invented by Thomas Edison in 1901 recently being mentioned more favorably.

Read the rest at unpopular-truth.com

About the author Lars Schernikau is an energy economist, entrepreneur, commodity trader, and book author. He currently lives in Europe and Asia. Previously, Lars worked at the Boston Consulting Group in the US and Germany. Lars is a member of the International Association for Energy Economics (IAEE) and writes regularly on his blog on all topics around energy (blog.unpopular-truth.com).

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