Navigating The Battery Storage Boom

Co-authored with: Ray Wu, Tungsten Associates; Jonathan Haag, Tungsten Associates

Introduction

Around the world, countries large and small have set goals, legislation, and financial incentives to transition towards decarbonized societies and economies in the so-called "global green energy transition." As part of efforts to adapt and modernize the electrical grid to support renewable energies, battery energy storage systems ("BESSs") are being increasingly incorporated into electrical grids by public utilities and private users. The global BESS market was estimated to be worth US$7.8 billion in 2024, is projected to more than triple to US$17.5 billion by 2028 and by 2029 is projected to exceed US$25 billion.¹

BESSs are larger, more advanced versions of the batteries powering popular electric vehicles or consumer electronics but used to store energy to power specific facilities or feed into the overall power grid. While there are technical and economic cases for implementing BESS solutions, the most common, large-scale implementation is to utilize a BESS to complement the inherently intermittent nature of renewable energy sources by efficiently storing and supplying energy to the grid when required. For example, the availability of solar or wind energy does not always align with customer demand, which can lead to insufficient power supply and potential outages. A BESS can provide a steady output of energy to not only match demand, but also to optimize the grid to reduce demand peaks (also known as "peak shaving") making operations more cost-effective.

In recent years, the US has seen significant growth in the installation of BESS projects with consecutive record-breaking years of installed utility-scale BESS projects in 2022 and 2023. 2024 saw an even higher rate of deployment (with over 12GW added, bringing total U.S. BESS capacity above 25GW).² In Canada, BESS projects are starting to gain traction, with provinces like Ontario launching major procurements with large projects underway (for example, the 250MW Oneida Energy storage project, the largest in Canada, slated for 2025 completion)³. Public, regulatory, and economic endorsements have fueled this "boom" of BESS projects, but the logistics and know-how associated with the installation of these projects have not grown in tandem with the rapid development, leading to opportunities to both increase the number of these projects and improve the efficiency of constructing these facilities.

Like the US, Europe's battery energy storage deployment is set to witness substantial growth, with installations reaching nearly 6GW in 2023, followed by a projected plateau until around 2027 due to lithium supply constraints and other challenges. Despite these hurdles, countries like Great Britain, Germany, Italy, France, and Ireland are making notable strides. For instance, Great Britain aims for 14.4GW of installed battery capacity by 2030, with over 4GW already deployed as of 2024⁴, while Germany is on track to have about 3.9GW installed by the end of 2025, driven largely by residential markets and the integration of storage with home solar PV systems. Italy's market, largely residential until now, has already surpassed 5GW of cumulative storage capacity by 2024 and is shifting toward more utility-scale installations.⁵ France and Ireland continue to deploy significant BESS capacity, with France moving forward on new large projects (e.g., a 240MW/480MWh system announced in 2024) while Ireland's deployment rate is slowing as a new interconnector with France reduces the need for standalone capacity.⁶

In Germany, the Alfeld project by Kyon, marks one of the largest battery storage projects in Europe. This project benefits from recent legislative reforms in Germany that extend grid fee exemptions for energy storage projects, significantly reducing the financial barriers for large-scale investments in the German market.⁷

A major project underway in Belgium, is the 600-megawatt, 2,400-megawatt-hour ("MWh") project by Giga Storage, one of the largest in Europe, aimed at enhancing the integration of renewable energy into the grid. Belgium's proactive approach in facilitating grid-scale energy storage, including awarding capacity market contracts to BESS projects, contrasts with the challenges observed in the Netherlands' energy storage market.⁸ TotalEnergies is developing its largest battery energy storage project in Europe in Belgium. This project is set to enhance grid stability and support the development of renewable energies, demonstrating the company's commitment to expanding its electricity and renewable activities. By the end of 2022, TotalEnergies had a gross renewable electricity generation capacity of 17GW, with plans to expand to 100GW by 2030.⁹

In South America and other emerging markets, The Rockefeller Foundation is leading the BESS Consortium which aims to deploy 5-GW of battery energy storage systems by the end of 2024. This initiative launched at COP28 in 2023, with an initial goal of deploying 5GW of storage by 2024 is part of a larger plan to enable 400GW of renewable energy by 2030. By mid-2024, 15 countries (such as Barbados, Belize, and Ghana) had joined, with about 1.4GW of projects in development.¹⁰ Meanwhile, regional BESS efforts are accelerating: Brazil has announced its first battery storage auction in 2025 to spur deployments¹¹, and Chile after commissioning two co-located BESS projects in 2023¹²inaugurated Latin America's largest standalone battery system (200MW/800MWh) in April 2025¹³, bolstering grid resilience towards its 2030 and 2050 clean energy goals.

Common Challenges on BESS Projects

The challenges to BESS projects are not new or unique to the BESS industry. The rapid growth of the sector combined with other regional and geopolitical factors has led to outsized impacts on BESS projects. Three challenges that we see impacting the development of BESS projects are: supply chain, a surge of new stakeholders into the sector, and labour shortages across the construction industry.

Supply Chain

At this point, you may be thinking, "supply chain... a real original, thought-provoking place to start..." But, BESS projects are particularly sensitive to supply chain impacts given the types of components required for each system, as well as the origin of those components (spoiler alert: most of them are not manufactured in the US or Canada).

BESS projects follow the same sequence as many other construction projects:

• A location is identified for the BESS and studies are undertaken to confirm the suitability of a system in that location, from the technical, commercial, and regulatory perspectives (more on that later);
• Design and engineering follow, to define the components required to construct the system to achieve the desired capacity;
• Materials and equipment must be procured and delivered to the project site;
• Once delivery dates are confirmed, site work and foundations must be completed so equipment can be installed as it is delivered; and
• The system is connected, integrated, and commissioned before beginning commercial operation.

Prior to the BESS "boom," a BESS installation project could begin commercial operation within a year of contract execution. Now, as the demand for electrical equipment has reached unprecedented levels, BESS and other electrification projects compete for the same resources and equipment, such as batteries, transformers, switchgear, and disconnects.

It used to be that large, customized electrical equipment, such as transformers for large industrial facilities, would be ready for delivery within 50 weeks of the purchase order. But by 2021, lead times for this equipment had stretched to 80 weeks, driven by the availability of sub-components, impacts to shipping durations, and the increased volume of orders.

As more specifically related to BESS projects, global battery supply was stressed prior to 2023, with transformer availability becoming the most stressed lead supply factor in 2023 after tightness in 2022. Notably, by 2024 battery costs began to decline (with lithium-ion battery pack prices falling roughly 20%), providing some relief on the cost front, but lead times for critical equipment remain lengthy¹⁴. Others note lead times for high-voltage and medium-voltage equipment and enclosures have doubled or tripled when compared to lead times prior to the BESS "boom".

As a result of these extended times for equipment delivery, a project that once could have been completed within a year might now be extended another year or more.

Apart from strained manufacturing capacity, BESS projects in the Americas are also susceptible to impacts to ocean-bound freight. While some final assembly of BESS equipment is completed in North America, most raw materials and subcomponents are manufactured and supplied from overseas. The shipping industry has been subject to a myriad of impacts since 2020, including port delays, container shortages, reduced capacity of key canals, and attacks in the Red Sea. Shipping experts anticipate global ocean freight will continue to be impacted by these (and, potentially, other not-yet-known) factors.

BESS projects have limited ability to mitigate shipping delays. Air freight may not be possible due to the weight of the equipment or may be prohibitively expensive. Contractors and developers must assess the commercial implications of project delays as compared to expediting costs.

Another emerging risk to the supply chain for BESS projects is the current geopolitical environment, particularly between the United States and China, Canada, and Mexico (among others). The strained relationships amongst these countries have resulted in tariffs and restrictions in the past and seem to be heading toward further limitations and outright bans. For example, in February 2024, Duke Energy announced it would decommission BESS facilities at military bases that utilized batteries manufactured by Chinese battery manufacturer CATL. This, or similar, restrictions on vendors for batteries or other equipment could have further – and potentially significant – impacts on availability, costs, and lead times.

Finally, the procurement for BESS projects is further frustrated by the assortment of new entrants into the market drawn by the rapid growth of the industry. As discussed further below, many of the developers, contractors, and suppliers involved in BESS projects were unfamiliar with one another and with standard terms, policies, or expectations, resulting in misalignments.

Overall, supply chain issues have been significant, and we do not anticipate any meaningful or sustained relief in the near future. These issues can impact project budgets and schedules for all stakeholders.

Stakeholders New to BESS Projects

As with the expansion of any sector, the increase of new and potential BESS projects has attracted new stakeholders to the industry, including developers, general contractors, and trade contractors. Regulators and authorities charged with oversight of the electrical grid have had to adapt to increased requests to connect these projects to the system.

The key stakeholders on a BESS project include:

• Developer or Owner, who will ultimately realize the long-term financial benefits of the facility. This entity is typically responsible for securing the land, rights, and financing for the project, as well as contracting with those necessary to design, construct, start up, operate and maintain the facility;
• Contractors, including those responsible for a broad range of services needed to execute a BESS project, such as electrical, geotechnical, and other studies, design and engineering, procurement, construction, and commissioning and start-up. While one common contracting model for BESS projects is for the developer/owner to retain one general or "turnkey" contractor to be responsible for all engineering, procurement, and construction necessary to install the project, there are many different ways in which the execution of a BESS project can be organized to adapt to the numerous unique challenges of each project such as the capacity and location of the project;
• Authorities Having Jurisdiction ("AHJs"), refers to any government entity, regulator, or other body required to provide input or approval of the project or its operation. This may include permitting agencies (land disturbance, storm water protection, building, to name a few) and the operator of the electric grid to which the BESS will be connected. These entities have significant authority to influence and regulate the design, connection, and operation of a BESS.

As opportunities to develop BESS projects increased, so did the number of developers and contractors interested in working in the sector. This included established entities that were interested in expanding into a new market, as well as start-up firms established to focus on BESS development, installation, and/or operation. Unsurprisingly, these entrants were not always fully aware of the requirements for, or prepared to plan the execution of, a BESS project, especially considerations unique to BESS projects.

For instance, BESS projects have a unique relationship with a specific AHJ – the local utility provider. Any new connection or change to the grid is regulated by the local utility provider, who oversees and stipulates the allowable type, specifications, and vendors of electrical equipment. The local utility provider has a significant, if not absolute, influence on the design and operation of a BESS that will be connected to its grid. Not all developers and contractors are accustomed to this level of outside control or managing the requirements or changes that may arise as a result.

Throughout a project, the developer and contractor must coordinate with the local utility provider to approve the design, including the utility's review at the 30%, 60%, 90%, and issued-for-construction packages, and procurement of electrical equipment. Additionally, parties should account for the time required for those reviews and be ready to handle any extension to the originally anticipated review periods. It is not uncommon for conflicts to arise if the contractor sees a client-caused delay due to untimely approval by a local utility and the client sees a contractor-caused delay for not meeting AHJ requirements.

Without proper coordination with the local utility or other AHJ early in the design stage, BESS projects are susceptible to design changes, permitting delays, and scope growth – all of which can affect the budget and schedule (and, ultimately, profitability) of a project.

Unfortunately, the lack of experience amongst stakeholders can result in misaligned responsibilities and expectations and communication breakdowns, all of which can contribute to stakeholder conflict, schedule delays, and increased costs.

Stressed Labour Markets

Across the construction industry, firms have struggled to find enough qualified workers to meet current demand. The BESS industry is no exception. Labour shortages have impacted the availability of manual labourers needed to perform civil works (such as equipment foundations, cable trenches, and site drainage), as well as the more specialized electrical and integration skills required to install, integrate, and commission the BESS.

The abundance of BESS projects and a stressed labour market gave rise to new relationships between general and trade contractors who were not familiar with one another. These new relationships can be further complicated when contractors incur schedule and cost impacts to retain subcontractors who had to demobilize and re-mobilize from the site during prolonged project delays (e.g., late equipment deliveries).

These labour shortages and new relationships between contractors can negatively impact the quality, safety, cost and schedule of the work, and will require more diligent planning and oversight to mitigate these factors.

Moving Forward

The BESS industry appears poised to grow as authorities sort out how to meet green energy transition goals. Advances in and increased visibility of new technologies for battery storage solutions will contribute to wider implementation and increased opportunities for this industry. Nevertheless, the challenges facing BESS projects will continue, and stakeholders should consider ways to proactively manage and mitigate these risks.

Opportunities to improve project execution in the BESS sector include:

• Develop partnerships with key suppliers: The BESS market is becoming increasingly competitive, which is likely to increase competition for batteries, other electrical equipment, and key trade contractors (such as civil and electrical). Identifying and securing strategic partnerships is one way to manage the risk to ensure you have equipment available and labour ready to complete installation, which can help manage costs and meet tight schedule requirements.
• Define project scope adequately during tender phase: Stakeholders should coordinate with local utility providers and other AHJs early in the project development process in order to understand the requirements and codes for due-diligence studies, permits, engineering design, and long-lead equipment. An early understanding of project requirements allows for increased clarity as the scope of work is developed, risks are assessed, and pricing is submitted.
• Perform proper due diligence during baseline schedule development: A properly developed baseline schedule can help manage stakeholder expectations and improve the efficiency of project execution. This includes adequately accounting for all stakeholder responsibilities, such as permitting, design review by owner and AHJ, lead times for material and equipment, and realistic installation time periods accounting for local conditions. If responsibilities and timelines are clearly identified and aligned to the contract from the outset of a project, conflicts can be prevented or quickly resolved later in the project.
• Utilize and adhere to contractual change management procedures: Things change – it's a fact of life on construction projects – which is why contracts contemplate a process for working through changes during a project, including those related to design, AHJ requirements, material or equipment availability or delivery time, or site conditions, among others. By properly and in a timely way, following the process for identifying, notifying, and approving change notices, stakeholders can minimize the stress associated with changes on a project – particularly where efficient change management is paired with a well-defined scope of work.

BESS projects are in the midst of an exciting period of growth and implementation. As stakeholders work through the "growing pains" of the sector and continue to improve the execution of these projects, the industry is bound to see continued and expanded success.

Footnotes

1. Source: MarketsandMarkets report (July 2024) – updated global BESS market size and forecast.

2. Source: Wood Mackenzie/ACP Energy Storage Monitor Q1 2025 – U.S. energy storage deployment data.

3. Source: IESO (Ontario) 2023 Long-Term RFP results – Canadian storage procurement.

4. Source: RenewableUK (2024) – UK battery storage operational capacity estimate.

5. Source: Terna (Italy TSO) – storage deployment data as of Oct 2024.

6. Source: Industry reports (2024) – France 240MW project announcement; EirGrid market updates.

7. Source: Energy-Storage.News (2023) – German grid fee exemption for storage projects.

8. Source: Energy-Storage.News (2023) – Belgium Giga Storage project and market context.

9. Source: Energy Industry Review (2023) – TotalEnergies Belgium battery project and company targets.

10. Source: The Rockefeller Foundation (Dec 2023) – BESS Consortium launch and goals.

11. Source: Brazil National Energy Plan announcements (2024) – planned 2025 battery storage auction.

12. Source: Energy-Storage.News (2023) – Innergex/Mitsubishi Chile co-located BESS projects.

13. Source:pvmagazine (Apr 2025) – Chile 200MW/800MWh BESS inauguration.

14. Source: BloombergNEF (via Energy-Storage.News, Dec 2024) – Lithium-ion battery price survey results.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.