Today, the energy storage industry is transitioning from policy-driven growth to a market-oriented stage, officially entering a trillion-dollar market and becoming a core pillar for building the new-type power system.
From the rapid growth of grid-side independent energy storage to the fast expansion of behind-the-meter energy storage, and from the mainstream application of lithium-ion batteries to the coordinated development of diversified technology routes, every segment of the energy storage industry contains valuable knowledge and expertise.
For professionals in the energy storage field, only by understanding technologies, recognizing industry trends, and mastering practical applications can they establish a strong position in this rapidly evolving market.
Today, we have compiled 18 essential knowledge points in the lithium battery energy storage industry, covering multiple dimensions of the sector. If you can fully understand more than 10 of them, you can truly be considered an industry expert.
1.Is the Energy Storage System Rated for 8,000 Cycles?
The cycle life of an energy storage system is based on specific conditions, including:
• Cell temperature: 25°C
• Depth of discharge (DOD): 100%
• State of health (SOH): 80%
• Cycle life: 8,000 cycles
Regarding these three key parameters, ask suppliers the following critical questions:
1) How well can you control the temperature difference between battery cells?
Can you precisely maintain the cell temperature around 25°C during operation?
2) Is your 8,000-cycle rating based on a 100% depth of discharge (DOD)?
Because actual energy storage systems typically operate at around 90% DOD, have you converted the cycle count to a 100% DOD equivalent?
Also, is the cycle calculation based on charged energy or discharged energy? Since charging and discharging involve energy losses, calculating based on discharged energy provides a more realistic evaluation of actual system performance.
3) Is the state of health (SOH) limit based on 80% or 70%?
Currently, some manufacturers define the end-of-life threshold of an energy storage system as 80% SOH, while others use 70% SOH as the lifecycle limit.
2. What Is the Round-Trip Efficiency (RTE) of an Energy Storage System?
The profitability of an energy storage system depends on the price difference between electricity purchasing costs during charging and electricity revenue during discharging.
Round-trip Efficiency (RTE) = discharged energy / charged energy
The higher the round-trip efficiency, the higher the potential revenue of the system.
Round-trip efficiency should be evaluated based on the entire energy storage system, meaning that all losses within the system must be included in the calculation, including:
1) Does the round-trip efficiency promoted by the manufacturer only consider the energy entering and leaving the PCS?
If so, energy consumption from liquid cooling units, auxiliary power consumption inside the cabinet, internal cabinet losses, and grid-connected cable losses are not included, causing the actual efficiency to be lower than the claimed value.
2) Does the calculation consider system downtime caused by failures?
System reliability directly determines the actual operating hours of the energy storage system, which consequently affects its economic returns.
3. Does the Fire Protection System Truly Meet the Three-Level Standard?
One unavoidable challenge for lithium battery energy storage systems is thermal runaway. Therefore, energy storage systems must be equipped with a comprehensive fire protection system.
Many manufacturers claim to provide a three-level fire protection system, which includes:
• PACK-level fire protection
• cluster-level fire protection
• system-level fire protection
However, in many real-world cases, manufacturers promote the highest configuration while the actual delivered products do not match the advertised specifications.
The first issue is the reduction or removal of aerosol fire suppression inside the battery PACK. Another common problem is that manufacturers confuse cluster-level fire protection with system-level fire protection.
When questioned, some suppliers may respond: “The quotation provided is not for a three-level fire protection system.”
4. What Is the UL9540A Test Report?
UL9540A is one of the world’s most authoritative and stringent fire safety evaluations for energy storage systems. It is specifically designed to verify whether a fire caused by thermal runaway in a single battery cell will propagate to the entire module, cabinet, or even the complete energy storage facility.
GB/T 51048-2025 (effective from April 1, 2026) explicitly requires large-scale energy storage projects to provide thermal runaway propagation test reports. During grid connection, project acceptance, and fire protection approval processes, the UL9540A report has become a critical safety access threshold.
Without this test report, the energy storage equipment you invested in may ultimately become nothing more than a pile of scrap metal.
5. Does the Energy Storage System Use Energy-Type or Power-Type Battery Cells?
Many people assume that all battery cells are the same, but this is not the case.
Currently, the two most common application scenarios for energy storage systems are:
• Peak-valley electricity price arbitrage
• Peak shaving and frequency regulation
For peak-valley electricity price arbitrage, the discharge rate is mainly 0.25C–0.5C (corresponding to 4-hour and 2-hour energy storage systems).
However, peak shaving and frequency regulation require much higher discharge power, typically 1C–3C, resulting in completely different requirements for the battery cell’s pulse power capability.
1) Battery Cells for Peak-Valley Arbitrage:
These cells have weaker pulse power capability and are not suitable for frequent power fluctuations.
Under high-rate discharge conditions, they generate significant heat, experience faster degradation, and may suffer a substantial reduction in service life. They also have higher internal resistance, larger voltage drop, slower response speed, and cannot meet the requirements for frequency regulation capacity.
2) Battery Cells for Peak Shaving and Frequency Regulation:
These cells feature extremely strong pulse power capability, millisecond-level response, and fatigue resistance reaching tens of thousands of cycles.
However, their cost per kWh is higher, and the economic benefits from electricity price arbitrage cannot offset the higher investment cost.
6. What Balancing Strategy Does the Energy Storage System Use?
An energy storage system contains a large number of battery cells operating under different series and parallel configurations. The performance of individual cells cannot remain completely identical. If these differences are not managed over time, the inconsistency between cells will continue to increase, directly affecting the overall system efficiency, economic returns, and safety.
Currently, the main balancing strategies used in energy storage systems include the following:
1) Passive Balancing
Passive balancing uses balancing resistors connected in parallel with battery cells. Excess energy is dissipated as heat through resistors until the voltage of all cells becomes consistent.
The biggest disadvantages of this approach are:
• Energy waste
• Significant heat generation
• Slow balancing speed
Therefore, passive balancing is not suitable for large-capacity energy storage systems. It is more commonly applied in residential energy storage and small-scale commercial and industrial energy storage applications.
2) Active Balancing
Currently, leading companies adopt different active balancing solutions. The main approaches include:
a. Adding inductors, capacitors, and DC/DC conversion circuits to the BMU circuit to transfer energy from high-voltage cells to low-voltage cells.
b. Adding DC/DC modules to cluster-level high-voltage boxes to achieve forced balancing within individual battery clusters, avoiding capacity differences between clusters.
c. Using the station-level EMS to directly schedule battery clusters or even individual battery packs. By controlling batteries to operate at different current levels, the system achieves balancing.
This approach requires extremely high compatibility and coordination between EMS and BMS strategies.
7. What Are the Main Cooling Solutions Used in Liquid-Cooled Energy Storage Systems?
Currently, mainstream liquid-cooled energy storage systems are mainly divided into the following two types:
1) Cold Plate Liquid Cooling
Also known as indirect liquid cooling, the battery cells do not directly contact the cooling liquid.
Instead, heat is transferred indirectly through metal cold plates attached to the battery cells.
This solution offers:
• Mature and reliable technology;
• Lower cost;
• High market adoption.
It is currently the mainstream cooling solution used in energy storage systems.
2) Immersion Liquid Cooling
In immersion liquid cooling, battery cells are directly immersed in an insulating cooling liquid, achieving fully enclosed heat dissipation.
This method provides:
• Extremely high cooling efficiency;
• Better temperature uniformity.
However, it also involves:
• Higher costs;
• More demanding maintenance requirements.
8. What Communication Protocols Are Used Externally by Energy Storage Systems?
For external communication, domestic energy storage systems mainly interact with two types of entities:
Currently, the mainstream communication protocols used include:
1) IEC 60870-5-104 Communication Protocol (104 Protocol)
This is the most widely adopted and commonly required telecontrol protocol in China’s power grid dispatch systems.
• Based on TCP/IP communication architecture
• Uses port 2404
• Applications include: Telemetry, Remote signaling, Remote control, Remote regulation (AGC/AVC, peak shaving, frequency regulation commands)
2) IEC 61850 (MMS/GOOSE/SV)
IEC 61850 is mainly used in projects requiring extremely high response speeds, especially new intelligent substations and advanced energy infrastructure projects.
It enables rapid control of large-capacity energy storage systems, achieving millisecond-to-microsecond-level response.
In such projects, IEC 104 + IEC 61850 are often deployed simultaneously:
• IEC 104 is responsible for grid dispatch communication, telemetry, and remote signaling.
• IEC 61850 is responsible for fast control and protection coordination.
9. What Communication Protocols Are Used Internally Within Energy Storage Systems?
An energy storage system contains multiple internal devices, and the communication protocols used between these devices are not always the same.
Generally, an energy storage unit controller is used to collect and convert data from different communication protocols. The system then converts various internal communication methods into a unified communication protocol for connection to the station-level EMS or external systems.
Common communication protocols include: MODBUS TCP, MODBUS RTU , CAN communication, DIDO interface, RS-485 communication , IoT communication, IEC 104 communication , IEC 61850 communication
10. How Is the Grid Connection Voltage Level of an Energy Storage System Determined?
The grid connection voltage level of commercial and industrial energy storage systems is determined comprehensively based on factors such as system capacity, grid structure, and connection scenarios (self-consumption, independent operation, or participation in ancillary services).
The selection must comply with current national standards, while specific requirements are subject to the latest regulations issued by each province.
General requirements are as follows:
1) Enterprise self-consumption and small-scale systems (≤1 MW):
Connected to the user-side distribution network at 380V, in compliance with GB/T 43526-2023.
2) Conventional commercial and industrial applications (1–10 MW):
Connected at 10kV, complying with GB/T 43526-2023 and relevant customer-side connection requirements, such as those in Jiangsu Province.
3) High-power systems (≥10 MW) or projects participating in ancillary services:
Connected at 35kV or above, with technical and economic evaluation conducted according to GB/T 36547-2024.
4) Independent energy storage and public grid-connected systems:
Connected at 10kV or above, determined according to system capacity and grid structure. A complete set of grid connection tests must be completed.
11. Why Can’t the Factory Incoming Voltage Be the Same as the Energy Storage System Grid Connection Voltage?
During the preliminary survey stage of an energy storage project, the factory incoming voltage level must be identified as early as possible.
When designing the energy storage system, it is recommended to connect the system to the grid at a voltage level lower than the factory incoming voltage.
If the energy storage system is connected at the same voltage level as the factory incoming line, the charging process of the storage system is equivalent to adding an additional load to the grid. This requires the enterprise to submit transformer-related applications to the power grid company, making the approval process more complicated and difficult.
Furthermore, this approach increases demand electricity charges and reduces the investment return of the project.
From a technical perspective, challenges include:
• Metering and settlement control
12. What Is Cross-Transformer Energy Consumption?
When multiple transformers operate in parallel within the same factory area, the energy storage system is connected to the low-voltage side of one transformer.
During discharge, the stored energy not only supplies the loads connected to that transformer, but can also be stepped up through the transformer to the 10kV or 35kV high-voltage busbar, allowing power to be distributed to other transformers.
This enables unified energy consumption management across the entire factory, maximizes energy storage utilization, and improves the overall economic benefits of the energy storage system.
13. What Is Demand Management?
For commercial and industrial electricity users, a two-part electricity tariff system is commonly adopted. The demand charge is a fixed electricity cost calculated based on the maximum demand recorded during the month.
Maximum demand:
The highest value of the average power consumption over any continuous 15-minute period within one month.
(Unit: kW)
Demand charge = Maximum demand (kW) × Demand tariff (RMB/kW·month)
Energy storage system demand management refers to the strategy of using energy storage to actively discharge during peak electricity consumption periods, reducing the real-time power load of enterprises.
By lowering the maximum demand measured by the power grid, enterprises can reduce their demand charge expenses and improve overall electricity cost efficiency.
14. Anti-Backflow Protection in Commercial and Industrial Energy Storage Systems
For commercial and industrial energy storage applications, power grid companies generally require that discharged energy from the energy storage system must not flow back into the public grid.
A data acquisition device needs to be installed at the factory metering point to collect real-time load current information and transmit it to the EMS. Through appropriate control strategy algorithms, the system can achieve anti-backflow protection.
For systems with a single power supply incoming line, the implementation is relatively simple.
However, when a dual power supply incoming line is involved, dual metering points must be considered, requiring the EMS to properly adjust and optimize its control strategies.
Furthermore, when necessary, a hardwired anti-backflow protection device can be installed in the energy storage grid connection cabinet. Once reverse current is detected, the device will directly disconnect the energy storage grid connection switch.
15. Do Backup Power Functions Conflict with Anti-Islanding Protection in Energy Storage Systems?
To ensure personnel safety and equipment protection, energy storage systems are prohibited from continuing to discharge into the grid when a power outage occurs.
Relevant national grid connection standards (such as NB/T 11054 ) clearly require energy storage systems to be equipped with anti-islanding protection devices.
However, some factories also require backup power during grid outages. How can this conflict between backup power supply and anti-islanding requirements be resolved?
There are two main scenarios:
1) Manual Switching Scenario
A manual no-reclosing mechanism is installed at the grid incoming terminal.
Through control logic, the system manages the switching between the PCS grid-connected mode and off-grid mode, as well as grid power supply control.
In this case, the energy storage system functions as an emergency power source.
2) Automatic Switching Scenario
A Static Transfer Switch (STS) is added and connected in series between the grid and the load to achieve automatic grid-connected/off-grid switching.
This solution follows a switching logic similar to that used by traditional generator Automatic Transfer Switch (ATS) systems.
16. Centralized Energy Storage Systems and String-Based Energy Storage Systems
1) Centralized Energy Storage Solution
A centralized energy storage solution can be understood as a 1-to-N configuration, where one PCS corresponds to multiple battery clusters.
This architecture requires a battery combiner cabinet. All battery stacks are managed collectively, with unified AC/DC power conversion.
Centralized energy storage solutions have high requirements for battery consistency. The DC system is also more likely to experience circulating current issues.
2) String-Based Energy Storage Solution
A string-based energy storage solution can be understood as a 1-to-1 configuration, where one PCS corresponds to one battery cluster.
Each battery cluster is independently managed at the cluster level, providing stronger adaptability and reducing the impact of individual failures.
However, this architecture has slightly higher costs and a more distributed topology.
17. What Is Grid-Forming Energy Storage?
Traditional grid-following energy storage systems must rely on the grid to provide voltage and frequency references through a Phase-Locked Loop (PLL). They passively follow grid conditions and may disconnect from the grid when the grid becomes weak or experiences a blackout.
A grid-following energy storage system can essentially be regarded as a current source.
As the proportion of renewable energy in the power grid continues to increase, grid-following energy storage systems are gradually becoming insufficient to meet the requirements of new power systems.
In contrast, grid-forming energy storage refers to an energy storage system in which the Power Conversion System (PCS) adopts Virtual Synchronous Generator (VSG) technology to simulate the inertia characteristics of traditional thermal power generators.
It can:
• Suppress rapid frequency drops and rises;
• Provide strong disturbance resistance;
• Actively establish and stabilize grid voltage and frequency;
• Self-start and supply loads during a complete grid blackout, rebuilding a local power network.
18. After Adding Energy Storage to an Existing PV System, How Should PV Revenue and Energy Storage Revenue Be Balanced?
Grid-connected photovoltaic projects commonly adopt the Energy Performance Contracting (EPC) model, where the photovoltaic power station investor signs an agreement with the factory regarding the electricity price and energy consumption ratio.
After adding an energy storage system, the following key issues need to be clarified:
1) Will Adding Energy Storage Reduce the PV Energy Consumption Ratio?
During periods of high electricity prices, when the energy storage system discharges, the factory’s electricity demand decreases.
Once:
PV output power > Load demand power
the PV energy consumption ratio will decrease, resulting in more electricity being exported to the grid.(If anti-backflow protection is implemented, this may lead to PV curtailment.)
2) After Adding Energy Storage, Is the Stored Energy from PV or the Grid?
When the energy storage system charges during low electricity price periods, it is difficult to determine whether the charging electricity comes from photovoltaic generation or the public grid.
This distinction is difficult to measure physically.
Generally, it is determined through data from multiple metering points and analyzed based on the relationship between different measurement data.
However, this method lacks strong verification capability and may be difficult for all stakeholders to accept.
3) How Should Anti-Backflow Strategies Be Designed After Adding Energy Storage?
Grid-connected photovoltaic systems generally allow electricity export to the grid.
After adding an energy storage system, questions arise:
How should current sampling points for PV and energy storage systems be configured?
How can it be guaranteed that the stored electricity comes exclusively from photovoltaic generation?
These issues require careful technical analysis and further investigation.
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