10.07.2026
Over the past few years, I have had to participate in dozens of discussions on BESS projects — from the formation of state policy and regulatory approaches to the preparation of specific investment projects. In almost every one of these conversations, the same questions were repeated. And each time I noticed: most disputes arise not because of the complexity of the technology, but because of different understandings of its nature. That is why the idea for this article arose.
The topic of energy storage installations (BESS or Battery Energy Storage Systems — BESS) is one of the most discussed in the energy industry today. Although the large-scale development of storage systems in the world began back in 2017, when the commissioning of the Hornsdale Power Reserve in Australia (100 MW / 129 MWh) effectively launched the era of large network storage systems, it was the last few years that became a turning point for the Ukrainian market.
A full-scale war, systematic attacks on energy infrastructure, and the loss of a significant part of generating and network capacities have significantly changed the approach to ensuring the reliability of energy supply. In these conditions, BESS/BESS began to be considered not only as a tool for increasing the stability of the energy system, but also as one of the key elements of the future architecture of the Ukrainian energy sector.
At the same time, the rapid growth of interest in BESS is largely stimulated by the market. Equipment suppliers, system integrators, developers and investment companies are actively promoting new projects, increasingly positioning accumulators as a high-yield investment asset. Potential investors are often presented with expected returns of 20% per annum in foreign currency – indicators that significantly exceed the profitability of most traditional financial instruments and therefore require a particularly careful assessment of the assumptions on which such calculations are based.
For industrial enterprises, accumulator systems can indeed become effective tools for increasing energy sustainability, minimizing production risks and ensuring the continuity of technological processes. At the same time, the economic efficiency of most projects is determined not only by the ability to reserve electricity supply. It depends on a much wider set of factors: participation in different segments of the electricity market, opportunities to receive income from system services, quality of control algorithms, technical parameters of equipment, regulatory environment and financing structure.
Due to the combination of technological, market, regulatory and financial aspects, many simplified ideas and widespread myths have formed around UZE. Some of them arose due to the novelty of the technology, others – due to overly optimistic marketing expectations or attempts to extrapolate the experience of individual markets to completely different conditions. In this article, we will consider the most common misconceptions about energy storage systems and try to separate popular statements from technical, economic and investment reality.
The most common misconception about energy storage systems is that they are perceived as an enlarged version of a conventional battery or a “large power bank”: it is enough to buy a container with batteries, install it on the site, connect it to the network – and the system is ready to work.
The very word “battery” involuntarily forms such a perception. It focuses attention on battery cells, although in reality they are only one of the components of a much more complex system.
A modern energy storage system is a full-fledged electrical power facility that integrates power electronics, automation systems, digital control, and engineering infrastructure. In addition to battery modules, it includes battery management systems (BMS), power conversion systems (PCS), energy management system (EMS), supervisory control and data acquisition (SCADA), transformer substations, switchgear, cooling, ventilation, fire extinguishing, physical and cybersecurity systems, and a number of other subsystems.
However, even this list does not reflect the main thing. The value of a UZE is determined not by individual components, but by their ability to work as a single integrated system. The most modern batteries will not provide the expected result if the control system incorrectly determines the operating modes, the power electronics do not meet the requirements of the network, or individual subsystems are not coordinated with each other. As in any complex energy facility, reliability is determined not by the best element, but by the weakest link.
Evaluate UZE onlye by the type of batteries, their capacity or manufacturer – about as wrong as evaluating a modern aircraft solely by the characteristics of its engines or a power plant – only by the power of the generator. For an investor, customer or operator, the entire architecture of the system, the quality of its integration, control capabilities and compliance with the conditions of future operation are important.
However, even understanding that a UZE is a complex engineering complex does not mean a correct understanding of its economic nature. After all, after construction is completed, the most difficult part of the project is just beginning. An energy storage facility does not automatically start generating profit just because it is put into operation. This leads us to the next, no less common myth.
After the design is completed, the equipment is installed, the permits are obtained, and the facility is put into operation, many people have a natural expectation: now the system will start making money. If the equipment is working properly, then profit should appear almost automatically.
Unlike a power plant that produces and sells electricity, an energy storage facility does not produce anything by itself. It creates value only when its owner or operator is able to effectively use its flexibility. In other words, an energy storage facility does not sell kilowatt-hours, but the ability to quickly change the mode of electricity consumption or supply depending on the needs of the power system and the market situation.
Commissioning a facility is not the end of a project, but the beginning of daily operational work. The owner or operator must constantly make decisions: when to charge the system, when to discharge it, in which market segments to operate, how to allocate resources between arbitrage and system services, how to minimize battery degradation, how to fulfill contractual obligations, and how to adapt to changing market rules.
In fact, every day of operation is a trade-off between current revenue and long-term asset value. For example, an additional charge-discharge cycle may increase revenue today, but at the same time accelerate battery degradation and reduce the future life of the installation. Similarly, the decision to operate in one market segment may mean the loss of opportunities in another. The effectiveness of UZE is determined not only by the technical characteristics of the equipment, but also by the quality of control algorithms, the accuracy of price forecasting, the professionalism of the operations team, and the ability to quickly respond to market changes.
Another feature is that the UZE business model is not universal. For one project, the main source of income may be ancillary services, for another – price arbitrage, for a third – ensuring the energy security of an industrial enterprise or optimizing the operation of a solar or wind power plant. Most successful projects combine several sources of income, and their ratio changes depending on the market situation and regulatory conditions.
Investing in UZE does not end with the purchase of modern equipment. It only creates the prerequisites for building a business, the success of which depends on the quality of the economic model, operational management and the ability to monetize the technical capabilities of the installation.
In practice, this is often a surprise for investors. When discussing new projects, the issue of choosing equipment usually takes much more time than the future model of operating the installation. Although it is the latter that most often determines the financial result.
This explains why two seemingly identical projects built on equipment from the same manufacturer can demonstrate completely different financial results. The difference is not determined by the container with batteries, but by how it is managed.
And this is where another common simplification occurs. Many believe that if a business model has already been defined, then the financial result depends primarily on the price of the batteries or their technical characteristics. In reality, the economics of a project are much more complex and are determined by the interaction of dozens of technical, market, and regulatory factors. This will be discussed in the next myth.
During a professional discussion of UZE investment projects, a significant part of the discussions almost inevitably boils down to one question: how much does a battery cost? Manufacturers compete for the price of battery modules, developers compare offers from different suppliers, and investors often assess the attractiveness of a project primarily through its capital costs.This approach is understandable, as battery modules remain the largest cost item in the investment structure.
In fact, a cheaper battery does not always mean a more profitable project.
The economic result is determined not by the minimum cost of equipment, but by the total cost of ownership of the asset and its ability to generate a stable cash flow throughout its life cycle.
For example, a lower initial price may be accompanied by lower efficiency of the charge-discharge cycle, faster degradation, a shorter warranty period, higher operating costs, or the need to replace individual components earlier. Conversely, more expensive equipment can provide higher efficiency, longer service life, greater operational availability and, ultimately, a higher financial result over the entire period of operation.
It is equally important that the cost of batteries is only one component of an investment project. For many facilities, the costs of connecting to the grid, building substations, power electronics, control systems, engineering infrastructure, design, construction and installation work, financing, insurance and subsequent operation have a significant impact on the economy. In some cases, it is these elements, and not the battery modules, that determine the competitiveness of the project.
In addition, the same battery can demonstrate completely different financial results depending on the conditions of its use. A project built on high-quality equipment, but with a flawed operating strategy or inaccurate market forecasts, may be inferior in profitability to another, where a solution with more modest characteristics is used, but operational activities are organized more efficiently.
Professional investors are increasingly asking the question “Which battery is cheaper?”. Instead, they seek to understand which project will provide the best profitability, taking into account all costs, risks and projected revenues throughout the entire operational period.
Ultimately, the cheapest battery may turn out to be the most expensive solution if, for the sake of savings, you have to sacrifice efficiency, reliability or the resource of the installation.
However, even correctly selected equipment does not guarantee success. No less important is the question of whether the technical parameters of the installation correspond to the tasks that it is supposed to perform. After all, more capacity, more power, or more cycles does not mean better project economics at all. This is the subject of the following common myth.
At first glance, this logic seems flawless. If an energy storage system earns money by storing and selling electricity, then a larger capacity should automatically mean a larger profit.
One of the most common questions from potential investors is: “Why not install more batteries right away?”
In fact, this question does not have a universal answer.
Like any other investment project, a UZE has not maximum, but optimal technical parameters. The task of engineers, economists and financial analysts is not to build the largest system, but to find a configuration that will provide the best economic result throughout its entire service life.
In practice, the question “how many MWh do I need?” is one of the first questions that a customer asks. At the same time, it almost never has a quick answer. In most cases, the correct configuration is the result of a series of technical and financial iterations, rather than an initial assumption.
The optimal capacity is determined by dozens of interrelated factors. These include the technical characteristics of the equipment, the efficiency of the charge-discharge cycle, the permissible depth of discharge, the predicted degradation of the batteries, the characteristics of specific segments of the electricity market, the expected operating mode, the cost of capital, as well as the strategy for maintaining the required capacity throughout the life cycle of the installation.
For example, a system designed primarily to provide ancillary services may require a completely different ratio of power to capacity than an installation focused on price arbitrage or integration with a solar or wind power plant. There is no universal configuration that is equally effective for all usage scenarios.
It is equally important to consider the long-term behavior of batteries. Already at the stage ofdesign, it is necessary to decide how to compensate for the natural decrease in capacity during operation: whether to lay an initial reserve, or to plan a phased increase or replacement of individual modules in the future. This decision directly affects both the initial investment and the financial performance of the project.
The answer to the question “How many MWh do I need?” cannot be based on intuition or the principle of “the more, the better”. It is born as a result of a feasibility study, which simultaneously takes into account the technical capabilities of the equipment, market requirements, degradation forecast, operating costs and the financial model of the project.
Paradoxically, excess capacity can worsen the economics of the project just as much as its deficit. In the first case, the investor incurs unnecessary capital costs that do not create additional value. In the second, there is a risk of losing part of the future income or even the opportunity to work in selected market segments.
Professional design of a solar power system begins not with choosing the number of batteries, but with understanding what functions the system should perform over the next 10–15 years. And this leads us to the following common myth: many believe that after correctly determining the technical parameters of the project, all that remains is to choose the equipment manufacturer. In fact, even systems with the same characteristics can differ significantly in efficiency depending on the quality of their integration, control algorithms and operating conditions.
After a decision has been made on the power, capacity and configuration of the installation, the attention of most investors and customers naturally switches to the choice of equipment. At this stage, discussions arise about battery manufacturers, battery cell chemistry, inverters, transformers, and other technical specifications. Often, they are perceived as the main factor in the future success of the project.
Of course, the quality of the equipment is of fundamental importance. It determines the technical potential of the installation, its reliability, safety, and resource. However, in modern energy storage systems, the equipment is increasingly becoming only the foundation on which the real value of the project is created.
The main feature of the UZE is that it is one of the first energy assets where competitiveness is increasingly determined not by the physical characteristics of the equipment, but by the quality of digital control.
A modern energy storage installation is a multi-level digital system. At the lower level, battery management systems (BMS) operate, which monitor the status of each battery module, ensure safe operation, and protect batteries from modes that can accelerate their degradation.
The next level is formed by power conversion systems (PCS) and energy management systems (EMS), which determine the operating modes of the installation, coordinate the charge and discharge processes, take into account the technical limitations of the equipment, and ensure the implementation of the selected operating strategy.
At the same time, a modern UZE has long ceased to operate in isolation. Through SCADA systems, telemechanics, and digital communications, it constantly interacts with the external environment: the transmission system operator, the distribution system operator, adjacent energy facilities, and market infrastructure. Telemetry transmission, execution of dispatching commands, confirmation of readiness to provide auxiliary services, compliance with cybersecurity requirements and information interaction are becoming as important components of the project as the batteries themselves.
However, the most rapid changes today are taking place at another level – the levels of digital business optimization. Over traditional control systems, software platforms are increasingly actively developing that predict prices in different segments of the electricity market, analyze weather conditions, the expected operating mode of renewable generation, forecast demand, estimate future price spreads and form the optimal market strategy of the installation.
This is where artificial intelligence technologies are increasingly being used. Their task is not only to forecast prices or loads, but also to comprehensively optimize the operation of the installation: determining the optimal level of state of charge (SoC), predicting battery degradation, early detection of potential equipment failures, choosing between different sources of income and forming the most effective market position at each specific moment in time.
During project presentations, most questions traditionally concern batteries, inverters or productionequipment. Software algorithms are much less often discussed in detail, although they increasingly determine the economics of operating a plant.
In other words, if the equipment determines what the plant can potentially do, then digital control systems determine what it will actually do.
Therefore, two plants built on practically identical equipment can demonstrate significantly different financial results. The difference is increasingly determined by the quality of control algorithms, forecasting accuracy, speed of adaptation to market changes and efficiency of interaction with the power system.
This trend is likely to only intensify. If over the past decade, the main factor in competition between UZE manufacturers was the characteristics of battery technologies, then in the coming years, software platforms, optimization algorithms and solutions based on artificial intelligence will play an increasingly important role. They will determine how effectively the same physical infrastructure will convert its technical capabilities into a stable cash flow.
However, even understanding that the value of UZE is born at the intersection of equipment and digital management does not yet answer another common question: how many revenue streams can a single installation simultaneously serve?
In presentations of UZE projects, you can often see a long list of potential sources of income: price arbitrage, ancillary services, balancing market, optimization of solar and wind power plants, backup power supply of enterprises, peak load management, participation in demand management programs and other services.
Such a variety of possibilities makes a strong impression and creates a natural expectation: if the system is able to perform all these functions, then it will be able to simultaneously receive income from all available markets.
Physically, an energy storage installation has the same resource – limited power, limited energy capacity and a specific battery charge level at each moment in time. This resource cannot be fully used simultaneously for all purposes. If some of the capacity is already reserved for ancillary services, it cannot be used for price arbitrage at the same time. If the battery is being charged to cover the evening peak load, it may lose the ability to respond to a more profitable signal from another market segment.
Therefore, every decision to use the installation means giving up another potential opportunity. In economic theory, this is called opportunity cost, and it is one of the key concepts for understanding the economics of UZE.
The task of the operator or automated control system is not to operate in all markets simultaneously, but to constantly choose the most profitable use of the available resource. This choice depends on the forecasted prices, the technical condition of the installation, the battery charge level, contractual obligations, the system operator’s requirements, the expected degradation of the equipment and many other factors.
Modern management systems of UZE increasingly resemble a portfolio manager in the financial market. Their task is not only to manage electricity flows, but also to continuously optimize the ever-changing portfolio of opportunities. Every minute they assess which of the available scenarios of using the installation will create the greatest value both now and in the future.
For the investor, this is of fundamental importance. The business model of a modern UZE is not built on simply adding up all potential sources of income, but on professional management of the trade-offs between them. The financial model of the project should take into account not only possible revenues, but also lost revenue from those opportunities that will have to be abandoned for the sake of more profitable or more strategically important activities.
As the market develops, this task will only become more complicated. The number of potential services for UZE will grow, but the physical resource of the installation will remain limited. The competitive advantage will not be the ability to work in a larger number of markets, but the ability to choose the right market at the right time every time.
But even the right choice of market strategy does not guarantee the success of the project as a whole every day – much earlier, even before the installation is put into operation, a decision is made that determines whether this strategy will have a chance to be implemented at all.
When the basic technical decisions have already been made — power, capacity, configuration — there is a temptation to move on as quickly as possible. Why spend months on in-depth feasibility study if the main parameters of the project are already clear? It seems logical to start preparing for procurement and construction now, and to refine the calculations later, in parallel with implementation.
It is in this logical sequence at first glance that one of the most expensive mistakes in the industry is hidden.
A feasibility study (FES) is often perceived as a formal document — a simple summary of already adopted technical decisions. In fact, a high-quality FES is not the result of design, but a tool that actually forms the right technical decisions. It is at this stage that alternative equipment configurations are tested, operating scenarios are simulated, battery degradation is predicted in specific climatic and market conditions, regulatory risks are assessed, and a financial model is built that can withstand scrutiny by an investment committee or bank.
A project that skips this stage or goes through it superficially does not become technically simpler — it only transfers complexity and uncertainty to later, much more expensive stages: procurement, construction, commissioning. An error in the assessment of degradation, detected already during operation, costs orders of magnitude more than an additional month of analysis at the feasibility study stage.
The success of a renewable energy project is always shaped by a much broader system of factors than the technology itself.
First, it is necessary to correctly determine the business model. One and the same installation can operate to provide backup power to an industrial enterprise, integrate renewable generation, participate in the ancillary services market, perform energy arbitrage, or combine several of these functions. Not only future income, but also the optimal configuration of the system itself depends on the correctness of this choice.
Secondly, the quality of the project’s feasibility study is crucial. At this stage, the optimal installation parameters are determined, operating scenarios are assessed, battery degradation is predicted, risks are analyzed, a financial model is formed, and the economic feasibility of the investment is assessed.
Thirdly, success is largely determined by the quality of operational management. Even the best equipment does not compensate for an ineffective market strategy, inaccurate forecasts, or a weak management system.
No less important are the regulatory environment, grid connection conditions, availability of financing, contractual structure, system operator requirements, team qualifications, cybersecurity, and the ability to adapt the project to market changes over the next ten to fifteen years.
A modern UZE project should be viewed as a system in which technical, economic, digital, regulatory, and investment decisions are inextricably linked. A mistake in any of these elements can significantly reduce the effectiveness of even the best technology.
If we summarize all the myths discussed in this article, we can see a common pattern. Almost every one of them arises from an attempt to explain a complex system in terms of a single factor: the battery, its price, capacity, software, or a separate source of income. In fact, the value of an EES is not born in individual components, but in how harmoniously they work as a single system.
The most important competency in the field of modern energy storage systems is not the ability to find the best battery or the cheapest equipment, but the ability to see the project comprehensively – as a combination of technology, digital solutions, market, finance, regulatory requirements and operational management.
And, perhaps, this is the main conclusion of all seven myths considered.
The goal of this article was not to provide comprehensive answers to all questions related to energy storage systems. On the contrary, it was intended to show that most of the simple answers in this area turn out to be false.
Virtually every myth discussed arises from an attempt to explain a complex system in terms of a single factor. Some see only the batteries. Some see only the financial model. Some focus solely on software, artificial intelligence, or projected returns. In fact, a modern energy storage installationis one of the most complex energy assets, in which technical, digital, economic, regulatory and operational solutions are inextricably linked.
Successful UZE projects do not begin with the choice of equipment manufacturer or even with a financial model. They begin with the correct formulation of the task, high-quality feasibility study and systematic understanding of what value the installation should create throughout its entire life cycle.
This is especially important today, when the Ukrainian energy storage market is undergoing a stage of rapid development. The number of projects is growing, investor interest is increasing, the regulatory framework is being actively improved, and the possibilities for storage systems to participate in the operation of the energy system are expanding. At the same time, it is at this stage that the greatest number of inflated expectations, simplified assessments and misconceptions are formed, which in the future may cost investors, developers and customers a lot.
The seven myths considered are only a small part of the issues that determine the success of modern UZE projects. No less important are battery degradation management, capacity maintenance strategy throughout the life cycle, SoC optimization, software architecture selection, artificial intelligence application, bankability, contracting features, integration with renewable generation, interaction with the system operator, cybersecurity, as well as the specifics of the Ukrainian electricity market and regulatory environment.
Each of these topics deserves a separate professional analysis. This article should not be considered as a complete review, but as an introduction to a broader discussion about what modern energy storage systems should be, how to correctly assess their investment attractiveness, and what competencies will determine the success of such projects in the coming years.
After all, perhaps the most important conclusion is that BESS is no longer just a battery. It is a complex system in which physical infrastructure, digital technologies, market mechanisms, financial engineering, and professional management work as a single whole. And the sooner market participants move from simplistic ideas to such a comprehensive vision, the more mature, efficient and competitive the Ukrainian energy storage market will become.
I am convinced that in the coming years, most professional discussions around BESS will shift from discussing individual technologies to issues of economics, digital management and integration of storage systems into the electricity market. These are the topics, in my opinion, that will determine the competitiveness of future projects.
The history of the development of modern energy is largely a history of overcoming simplistic ideas. Once upon a time, solar energy was perceived only as an expensive way to produce electricity. Wind energy – as an unstable source of generation. Today, energy storage systems are also following a similar path.
Most likely, in a few years, most of the myths described in this article will seem obvious. But today, the quality of investment decisions and the future competitiveness of the Ukrainian energy storage market depend on the ability to see BESS as a comprehensive system, and not as a set of individual technical characteristics.
