In the second part of our series on how technology can accelerate the pace of real estate decarbonisation, we look at batteries – an increasingly important way to maximise the effectiveness of on-site renewable energy generation (and thereby reduce operational carbon intensity)

As we discuss in our Spectrum of Real Estate Decarbonisation, for a building to be ‘True Zero’ in operation (i.e. zero carbon emissions), we typically need to maximise its on-site renewable energy generation. Batteries are absolutely critical to this.

Most obviously, battery storage helps to solve the problem of intermittency: the mismatch between when the solar PV/ wind turbines etc are able to produce energy, and when that energy is consumed within the building. Buildings would otherwise have to rely on the electricity grid to solve this mismatch – so batteries reduce reliance on the grid, while allowing the use of more lower-carbon energy. They also make the building more resilient, by providing rapid access to back-up power in the event of grid outages.

In particular, lithium-ion batteries have become a key element of on-site renewables installations (and indeed all electric tech stacks). They’re popular not just because they’re very efficient (in terms of energy density) and long-lasting (often several thousand charge-discharge cycles), but also because they’ve become so much cheaper and more reliable over the last decade:

The price of lithium-ion batteries has fallen by more than 85% since 2013

But for all the benefits they offer – and their increasing affordability – battery systems also introduce several technical, operational and financial risks. These risks can deter building owners from investing in battery systems, limiting the potential impact of on-site renewables.

Fire/ explosion is a real risk, particularly for lithium-ion batteries: damaged, defective or overheating batteries can trigger thermal runaway, which can potentially cause catastrophic damage to a building. Not surprisingly, this makes insurers nervous: building owners might find it expensive or difficult (perhaps even impossible) to get insurance for buildings with large battery energy storage systems (BESS), particularly if they’re located in basements or upper floors, or co-located with people/ other equipment.

Another potential issue with batteries is performance degradation. Batteries are always going to lose capacity over time as they are charged and discharged (and some battery chemistries degrade quicker than others). But the rate of degradation can also increase if the batteries are not managed properly – for example if they get too hot, or they are discharged too deeply too often.

So how do we enjoy the benefits of battery storage while also minimising risks? This is where technology has an important role to play, in the form of battery management systems (BMS).

BMS are intelligent systems that use advanced analytics to improve the performance of battery systems. From a safety perspective, they continuously monitor voltage, temperature, and current data to detect anomalies before they escalate into critical failures – reducing the risk of thermal incidents, improving insurer confidence and accelerating approvals.

At the same time, these systems help to integrate buildings (including their on-site renewables) onto the electricity grid, by smoothing electricity demand. For example, they can identify opportunities to shift energy use to times when on-site generation is high – for example by scheduling heating/ cooling or EV charging for peak solar hours. They can also help to reduce demand spikes, by reducing non-critical loads or staggering how equipment is used. This may mean that the building can use a smaller battery and requires less grid capacity, reducing the cost of the system itself and local infrastructure upgrades. All of this helps to minimise unnecessary cycling, limit downtime and improve efficiency.

In other words, BMS technology means that battery systems are safer, perform better and last longer. This can materially improve insurer confidence – often the hidden bottleneck in deploying large on-site battery systems. And it makes the economics of battery storage more attractive, which by extension makes the economics of on-site renewables more attractive. So these systems are a vital enabler of real estate decarbonisation.