Accelerate smart grids with the introduction of BESS! Implementation advantages and issues learned from case studies
Reducing electricity costs and stabilizing supply in the manufacturing industry are the most important management issues. The BESS market recorded 125% year-on-year growth in fiscal 2023, and introduction to factories is accelerating with the support of 34.6 billion yen in government subsidies. In this article, I will explain how to reduce electricity costs by 10-30% per year and stabilize production lines by integrating smart grids and BESS.
What is BESS (Battery Energy Storage System) in smart grids?
BESS is a next-generation energy infrastructure that optimizes the balance between electricity supply and demand, and simultaneously improves factory productivity and reduces power costs.
A battery energy storage system (BESS) is a device that stores electrical energy and releases it as needed. In fiscal 2023, 156,000 units were shipped to the Japanese market, and 1.369,000 kWh were shipped on a capacity basis, achieving rapid growth of 125% compared to the previous year. BESS uses various types of battery technology, such as lithium-ion batteries, lead-acid batteries, flow batteries, etc., and it is possible to select the best one according to the size and application of the factory.
In the manufacturing industry, large systems over 500 kWh have become mainstream, and electricity costs have been reduced by 750-10 million yen per year. In particular, by preventing production line shutdowns due to instantaneous voltage drops, an opportunity loss avoidance effect of tens of millions of yen per year has also been reported.
The need for BESS in smart grids
The importance of BESS is growing as a core technology that absorbs the variability of renewable energy and supports stable factory operations 24 hours a day, 365 days a year.
Smart grids are systems that utilize information and communication technology (ICT) to upgrade power grids and aim for efficient and stable power supply. According to Fuji Keizai's forecast, the global battery market is expected to expand 3.6 times from 3,4191 billion yen in 2023 to 8,741 billion yen in 2040.
As the introduction of renewable energy such as solar power generation and wind power generation progresses in the manufacturing industry, the impact on production due to fluctuations in power generation volume has become an issue. BESS contributes to stabilizing the power supply of factories by storing surplus electricity from renewable energy and supplying it when needed. In fact, by combining BESS and solar power generation, it is possible to increase the self-consumption rate to 70-80%.
Smart grid issues solved by BESS
It eliminates the imbalance between electricity supply and demand, and optimizes factory electricity costs in terms of both basic fee reduction and pay-as-you-go fee reduction.
The biggest challenge with smart grids is the imbalance between electricity demand and supply. In the manufacturing industry in particular, peak power management is important because the maximum power demand (demand value) measured in 30-minute increments is directly linked to basic charges. With the peak cut by BESS, it is possible to reduce the basic fee by approximately 100,000 yen per year (5 kW x 1,890 yen x 0.85 x 12 months = 96,390 yen) by reducing 5 kW.
Also, by utilizing hourly rates, peak shifts using a price difference of about 32% between 23 yen 20 yen/kWh during peak hours and 15 yen 74 yen/kWh at night are possible within TEPCO's jurisdiction. If you shift 1,000 kWh/month, you can expect a reduction effect of 7,460 yen per month and approximately 90,000 yen per year. Furthermore, by using it as an emergency power source during a power outage, it also contributes to strengthening BCP (Business Continuity Plan).
What are BESS solutions for smart grids? Introducing our major providers
Major domestic and international manufacturers are developing high-capacity, high-reliability BESS solutions specialized for factories.
Nidec Corporation: Accelerating Smart Grids with Total Solutions
Nidec Co., Ltd. has a proven track record in large-scale industrial systems, such as achieving high-speed response within 1 second with a BESS for 10MW systems for the UK. The company's container-type BESS integrates a battery, power converter, transformer, and control system, and can reduce the time required to install it in a factory to less than half of what it used to be.
By linking with an energy management system (EMS), an error of 5% or less can be achieved in demand forecasting using AI, and charge/discharge schedules can be automatically optimized. This has confirmed an additional cost reduction of 15-20% compared to conventional manual controls.
https://www.nidec.com/jp/technology/casestudy/bess/
chintpower: flexible energy management with modular BESS
With its modular BESS, chintpower enables gradual capacity expansion as the factory grows. The company's system uses lithium iron phosphate (LFP) batteries and enables more than 20,000 charge/discharge cycles. This maintains an advantage in total cost even after 15-20 years of long-term operation.
Two-way power conditioners (PCS) also make it possible to participate in the supply-demand adjustment market, providing additional revenue opportunities of 50-1,000,000 yen/100 kWh per year. In the Kyushu region in particular, further economic effects can be expected by avoiding renewable energy output control.
https://jp.chintpower.com/news/detail/id/10322.html
Miraitone Co., Ltd.: Promoting decarbonization with smart microgrid systems
The smart microgrid system of MiraitOne Co., Ltd. integrates CEMS (Community Energy Management System) and BEMS (Building Energy Management System) to achieve energy optimization throughout the plant. By implementing this system, we have a track record of reducing energy costs by an average of 20-30% and reducing CO2 emissions by up to 70%.
In particular, in large enterprises with multiple plants, further optimization is possible through energy exchange between locations. The payback period will be around 5-8 years due to the use of subsidies, which will balance the realization of decarbonized management and improved profitability.
https://www.mirait-one.com/solution/sl150-smart-microgrid-system.html
Key points of infrastructure development and installation for BESS implementation
When introducing BESS into a factory, careful pre-planning and expert construction management are the keys to success. We will explain installation know-how based on actual data.
BESS building construction and installation process
When introducing BESS for large-scale factories, a 50m x 20m dedicated building may be required. The standard construction period for the construction process is a total of 7-10 months, including foundation work (2-3 months), structure construction (3-4 months), and electrical wiring/test operation (2-3 months).
In overseas cases, cases where additional costs were incurred due to delays in the construction process have also been reported, so it is important to manage the process with plenty of time. In particular, early planning is necessary to arrange large cranes and secure delivery routes. Installation costs range from 200,000 to 350,000 yen/kWh depending on scale, and economies of scale can be expected due to large-scale expansion.
Communication network development and BESS integration
It is essential to build a communication infrastructure that realizes stable operation 24 hours a day, 365 days a year through real-time monitoring and remote control.
In order to make factories smart grids, high-speed communication networks that can be controlled in milliseconds are required. By utilizing 5G communication, control with a delay of 1 ms or less is possible, and it is also compatible with instantaneous voltage drops in the system.
By utilizing IoT technology, BESS's charging rate, temperature, voltage, etc. are monitored in real time, and there are also cases where an operating rate of 99.9% or higher has been achieved through preventive maintenance. With a cloud-based monitoring system, BESS at multiple locations can be managed in an integrated manner, making it possible to optimize energy on a company-wide level.
Streamlining Transportation and Installation: Utilizing Container-Type BESS
By pre-assembly at the factory, container-type BESS can reduce the local construction period to 1/3 of what it used to be. Capacities of 500 kWh for a 20 foot container and 1 MWh for a 40 foot container are standard and can be transported by trailer.
The installation area can be reduced by 40-50% compared to conventional models, contributing to the effective use of factory sites. Furthermore, it is easy to handle future relocations and expansions, and has the advantage of being able to respond flexibly to changes in the business environment. The initial investment is slightly higher, but considering the reduction in lost opportunities due to shortened construction periods, there are many cases where total cost is advantageous.
Smart Grid Demonstration Project Technical Verification and Case Studies
Best practices for implementing BESS have been established based on knowledge obtained from domestic and international demonstration projects.
Smart grid demonstration project by NEDO
NEDO has been promoting the “Evaluation and Basic Technology Development of Next-Generation All-Solid-State Battery Materials” project with a budget of 1.8 billion yen since 2023. 33 corporations are participating and are aiming for practical application in 2027-2028. Solid-state batteries are expected to double the current energy density and reduce charging time from 30 minutes to 10 minutes or less.
In the demonstration project, a total of 15 projects are underway in Hokkaido and Kyushu, and economic effects on the scale of 20 million yen per year have been confirmed by avoiding output control of renewable energy. In particular, in combination with wind power generation, BESS facilities equivalent to 20-30% of the power generation capacity are being standardized.
https://www.nedo.go.jp/content/100939199.pdf
Demonstration of BESS technology by Hitachi, Ltd.
Hitachi, Ltd. has established system stabilization technology through demonstration tests using a large 2MW/2MWh class BESS. In the company's demonstration, virtual synchronous generator (VSG) technology achieved the same system stabilization capability as conventional thermal power plants.
For the manufacturing industry, we have developed a charge/discharge control system linked to production plans, and at the same time improving power quality, we have achieved results of improving production efficiency by 5-10%. In particular, in a demonstration at a semiconductor factory, the occurrence of defective products due to instantaneous voltage drops was reduced by 90% or more.
https://www.hitachi.co.jp/New/cnews/month/2020/10/1002.html
Examples of BESS optimization using IoT technology
Through the fusion of AI and IoT, predictive maintenance and automatic optimization have been realized, and operating costs have been drastically reduced.
In IoT use cases in the manufacturing industry, failures are predicted in advance by detecting abnormalities using vibration sensors and temperature sensors, and unplanned outages have been reduced by 80%. Using machine learning algorithms, battery deterioration prediction accuracy is 95% or more, making it possible to determine the optimal replacement period.
By utilizing digital twin technology, BESS operation simulations can be performed, and optimal charging/discharging patterns can be verified in advance. As a result, ROI is predicted with high accuracy before implementation, and the certainty of investment decisions is enhanced.https://www.advantech.com/ja-jp/resources/case-study/iot-infura-no-kouchiku
Optimizing energy management and supply-demand balance
I will explain strategies to improve energy management in factories and simultaneously reduce electricity costs and achieve decarbonized management.
Introduction of renewable energy and the role of BESS
The introduction of solar power generation in factories is accelerating toward the government target of aiming for a renewable energy ratio of 36-38% by 2030. However, there are concerns that fluctuations in power generation will affect production plans. BESS absorbs this fluctuation and ensures a stable power supply.
As an example, in a food factory, surplus electricity during the day is stored using a combination of 1 MW of rooftop solar power generation and 2 MWh of BESS, and used for nighttime refrigeration equipment. Annual electricity purchases have been reduced by 60%, making it possible to maintain the refrigeration function for 72 hours even during power outages. By utilizing the FIP system, we have achieved 20-30% higher profits compared to the FIT system by selling electricity during times when market prices are high.
System design for supply-demand balance adjustment
By participating in the supply-demand adjustment market, a new business model has been established to increase BESS's profitability and shorten the payback period.
In the supply-demand adjustment market, which began in earnest in 2024, the highest compensation is set for primary adjustment power (response time within 10 seconds). An annual profit of 500,000 to 1 million yen can be expected even with a 100 kWh BESS, which is an additional source of income in addition to reducing the plant's electricity costs.
Furthermore, by participating in demand response (DR), compensation of tens of thousands of yen per kW per year can be obtained for cooperation when electricity supply and demand are tight. In the manufacturing industry, it is possible to utilize these systems while minimizing the impact on production by adjusting with production schedules.
Utilization of consumer resources and energy management
Overall optimization is achieved by integrated management of multiple power demands (production equipment, air conditioning, lighting, etc.) within the factory. By introducing an energy management system (EMS), the operating status of each facility is grasped in real time, and optimal control is performed using AI.
In the case of a major auto parts factory, peak power was reduced by 30% by integrating production equipment, air conditioning, and BESS. We have achieved an annual energy cost reduction of 30 million yen. Furthermore, obtaining ISO50001 (energy management system) certification has led to improved evaluations from business partners.
Technical and regulatory issues and countermeasures for implementing BESS
In order to successfully implement BESS, it is important to correctly understand technical and regulatory issues and take appropriate countermeasures.
Technical issues in implementing BESS
Battery deterioration over time can be cited as a technical issue with BESS. In the case of lithium-ion batteries, the capacity maintenance rate after 10 years is generally 70-80%. However, by optimizing charging/discharging with the latest battery management system (BMS), it is possible to maintain 80% or more capacity even after 15 years.
Ensuring safety is also an important issue. The risk of thermal runaway is addressed by designing to prevent heat transfer between cells and introducing gas detection systems. In addition, multi-layer defense of control systems and the use of blockchain technology are also progressing as cybersecurity measures.
Compliance with regulations and standards
We will explain practical approaches for clearing complex laws and regulations and realizing safe and efficient BESS operation.
In order to implement BESS, it is necessary to comply with a wide range of laws and regulations, such as the Electric Utility Act, the Fire Service Act, and the Building Standards Act. In particular, high-capacity systems require the appointment of a chief electrical engineer and the formulation of safety regulations. Due to deregulation in 2024, safety management through remote monitoring was permitted under certain conditions, making it possible to reduce operating costs.
Compliance with international standards is also important. Compliance with IEC62619 (safety requirements for industrial lithium rechargeable batteries) and UL9540 (safety standard for energy storage systems) will lead to preferential insurance rates and improved reliability in transactions with global companies.
Building a business model and solving problems
The initial investment for implementing BESS is expensive, around 1.5 to 200 million yen for a 500 kWh system, but reliable return on investment is possible by constructing an appropriate business model. By combining electricity cost reduction (750-10 million yen per year), subsidy utilization (maximum 50%), and supply-demand adjustment market revenue (2.5 to 5 million yen per year), the payback period can be shortened to 5-8 years.
In the on-site PPA (power purchase agreement) model, BESS can be introduced with zero initial investment, and a mechanism for paying equipment costs from reduced electricity charges has also appeared. This allows you to enjoy the benefits of implementing BESS while minimizing the impact on cash flow.
Future prospects for smart grids and BESS
Due to technological innovation and changes in the market environment, BESS has evolved into an essential infrastructure for factory operations. I will explain the outlook for 2030.
Evolution and future potential of BESS technology
All-solid-state batteries, which are attracting attention as next-generation technology, will dramatically improve the performance of BESS through practical application in 2027-2028. The doubling of energy density reduces the installation area in half, and the charging time is reduced to 10 minutes or less. The operating temperature range has also been extended from -40°C to 150°C, eliminating the need for special air conditioning equipment.
With the practical application of sodium-ion batteries, BESS costs are expected to drop to 50-60% of the current level by 2030. China CATL has already begun mass production, and Nippon Electric Glass has successfully developed all-solid-state sodium-ion batteries in Japan as well. The drastic reduction in material costs will lower the hurdles for large-scale implementation.
The spread of smart grids and a sustainable energy society
Toward achieving carbon neutrality by 2050, making factories smart grids is an unavoidable path.
The virtual power plant (VPP) market is predicted to grow approximately tenfold from 7.5 billion yen in fiscal 2021 to 73 billion yen in fiscal 2030. The plant's BESS will also be integrated as a small-scale distributed power source, contributing to energy optimization throughout the region. This allows us to capture new revenue opportunities while fulfilling our social responsibilities.
Also, achieving 100% renewable energy using BESS is becoming the standard for companies participating in RE100 and SBT (Science Based Targets). As demand for decarbonization across the entire supply chain intensifies, the introduction of BESS has become an essential requirement for maintaining competitiveness.
Steps for a successful BESS implementation
The following systematic approach is essential for a successful BESS implementation:
- Current situation analysis(1-2 months): Collect power data every 30 minutes for at least 1 year and analyze peak occurrence patterns and reduction potential
- Formulation of implementation plans(2-3 months): calculation of optimal capacity, selection of installation sites, return on investment simulation
- Apply for a subsidy(3-4 months): Identification of available grants and preparation of application documents
- Construction/Test Run(6-9 months): Installation work and grid connection tests by specialized contractors
- Operation optimization(Continuous): Optimization of charge/discharge control using AI and regular performance evaluation
By reliably following these steps, you can reduce energy costs by 10-30% per year and achieve a return on investment in 5-8 years. The strategic introduction of BESS will become increasingly important in the future to strengthen the competitiveness of the manufacturing industry and balance decarbonized management.
