Battery Energy Storage System (BESS)

A battery energy storage system (BESS, often called an ESS) is an installation of battery cells, inverters, and controls that stores electricity and releases it when the grid needs it. It smooths the uneven output of wind and solar, meets peak demand, and increasingly backs the power-hungry AI data centers driving today’s electricity boom.

What is a battery energy storage system?

At its simplest, a BESS is a large bank of battery cells wired to power electronics that charge it when electricity is cheap or plentiful and discharge it when it is scarce or expensive. Utilities use it to firm up renewables and avoid building peaker plants; data centers use it to ride out demand spikes. A storage project earns money from the spread between cheap and expensive hours, from capacity payments for being on standby, and from selling fast frequency response to keep the grid stable. Almost all new grid-scale storage now uses lithium-ion chemistry, the same cells that power electric cars, which is why falling EV battery costs flow straight through to the grid.

That cost collapse is the engine of the whole story. The International Energy Agency describes batteries as the fastest-growing piece of the energy system:

Battery storage in the power sector was the fastest growing energy technology in 2023 that was commercially available, with deployment more than doubling year-on-year.

— International Energy Agency, Batteries and Secure Energy Transitions

Lithium-ion battery prices have dropped about 90% since 2010, from roughly $1,400 per kilowatt-hour to under $140, one of the fastest cost declines of any energy technology on record, and the world added 42 GW of storage in 2023 alone (IEA). The United States shows the same curve up close: utility-scale battery capacity grew 66% in 2024, with operators adding 10.4 GW to push cumulative capacity past 26 GW, the second-largest source of new generating capacity after solar (U.S. EIA). The longer-run outlook is steeper still. BloombergNEF expects global energy storage capacity to reach about 2 terawatts (7.3 TWh) by 2035, roughly eight times the 2025 level (BloombergNEF).

How does BESS connect to the wider theme?

It is the near-term revenue engine of the Solid-State Batteries & Energy Storage theme. While the solid-state battery is a late-decade technology bet, grid storage ships at scale today. That is why ESS contracts anchor the cash flows of Korean cell makers such as LG Energy Solution and Samsung SDI. The demand is already in the order books: LG Energy Solution’s ESS backlog hit 140 GWh at the end of 2025, and in March 2026 it signed a $4.3 billion deal to supply Tesla’s Megapack systems with LFP cells (Energy-Storage.news).

Related terms & concepts

• Solid-State Batteries & Energy Storageparent
• Solid-State Batterysibling

FAQ

Sources & references

1. Global Energy Storage Boom: Three Things to Know · BloombergNEF, 2025-09-01
2. LG Energy Solution targets 90GWh of battery orders in US energy storage market in 2026 · Energy-Storage.news, 2026-01-20
3. LG Energy Solution's US$4.3 billion agreement with Tesla and LFP manufacturing with GM · Energy-Storage.news, 2026-03-18
4. Batteries and Secure Energy Transitions (Executive Summary) · International Energy Agency, 2024-04-25
5. U.S. battery capacity increased 66% in 2024 · U.S. Energy Information Administration, 2025-03-31