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De-risk your BESS projects by keeping track of warranty conditions

What are performance warranties and why are they important in the design, operation and bankability of battery energy storage systems projects? This article answers these questions and shows how our TWAICE Warranty Tracker can minimize risks and ensure a successful business case.

TWAICE / Oct 11, 2022

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Introduction

The performance warranties of battery energy storage systems play a vital role in the design, operation, and ultimately bankability of BESS projects. Warranties are only valid if the complex and increasingly individual warranty conditions and operating limits are adhered to. Therefore, to minimize risks and ensure a successful business case, it is vital to have a complete and continuous transparency on the portfolio’s warranty conditions. The TWAICE Warranty Tracker identifies potential warranty issues early. This newly created transparency reduces technical risks, avoids unplanned warranty deratings, and simplifies warranty claims, therefore saving time and costs. 

The challenges of managing and tracking warranties

What are performance warranties?

Batteries come with two types of warranties – product warranty and performance warranty. The product warranty includes terms stipulating that the battery or system has been manufactured, handled, and installed properly.

The performance warranty guarantees that the battery will perform at a certain capacity for a certain length of time, including operating between minimum and maximum temperature and SOC limits, average power or C-rate, and total energy throughput. Performance guarantees typically include energy capacity as specified by a degradation curve or minimum lifetime and availability (e.g., uptime and response time), but can also include round trip efficiency, power and derating ability, and charge and discharge duration time.

Performance warranties are vital for the bankability of energy storage system projects both for storage system integrators as well as system owners. They impact the operational requirements of the BESS, service agreements, and the business models of companies involved.  

Role of warranties in BESS design

Energy storage system projects are designed with an outlook into the overall lifetime of the battery, and the fact that the battery will perform at a certain level during this time. These requirements are usually defined by the customer and then guaranteed by the warranty.

However, unlike in the mobility sector, energy storage system designers do not have access to a lot of data from the field that indicates how the battery will behave under different conditions in the future. Additionally, energy market regulations and rules are changing, sometimes unforeseeable, and hence not all future use cases can be anticipated.

This lack of transparency leads to increased risks for the integrator, which can be minimized with strict warranty conditions, which become increasingly stricter the longer the duration of the warranty.

Role of warranties in BESS operation

The main component of a warranty is usually a defined number of cycles, SoH or energy throughput in a defined number of years. Additional examples of warranty constraints include maintaining a certain temperature, average State of Charge, or C-rate. If these conditions are not adhered to, the warranty could be void. This creates challenges for operators and owners of storage systems, as they must always find the balance between a profitable operating strategy but stay within the warranty constraints to avoid the financial risks of a void warranty or warranty penalties. Whilst operators might be willing to accept warranty deratings for increased profits, this balance cannot be achieved without transparency into how the warranty is impacted.

Additionally, warranty conditions differ for every different type of battery. Cell manufacturers and system integrators often iterate their contracts based in incoming data from the field, further increasing the complexity of warranty agreements.

So how do asset managers and asset owners know that they are operating the battery energy storage system within the warranty constraints?

In many cases, there is a yearly maintenance cycle where the battery storage systems can be assessed on the various warranty relevant KPIs. This is incredibly time-consuming and expensive, taking around 4-5 days each time where the system is out of operation. Additionally, yearly checks are too infrequent to make sufficient changes if it is determined that the system is deviating from its warranty conditions.  In addition, warranty-relevant KPIs can be dependent upon the validity and accuracy of the data, the data resolution, and data stewardship and integrity measures.

Keeping track of warranties is therefore an incredibly vital element of operating and maintaining an energy storage system.

The central challenges regarding warranties can be summed up as:

  • Warranty conditions are complex, and they vary for different batteries.
  • Knowing whether the storage systems are being operated within warranty thresholds is impossible. Current options are time-consuming and do not provide the relevant information in time.  

Having the current warranty status at a glance at all times helps to swiftly mitigate harmful operation as well as avoid unplanned warranty derating or breaches.

Solution: TWAICE warranty tracker

The TWAICE warranty tracker solves these challenges for integrators and operators. For each storage system and string (one level below the system that contains several racks), the warranty tracker shows whether it is being operated within the thresholds specified in the warranty agreement.  

For each inverter, the warranty tracker states the deviation to the warranty. In the example in figure 1, the State of Health at 92.5% is shown. According to the warranty, this should be 93.7%, therefore with a deviation of -1.2%.

Benefits of the TWAICE warranty tracker

Reduce warranty violation risks and penalties: Automatically track the warranty status of each battery system. Get information on remaining capacity, warranty relevant cycling, roundtrip efficiency, and critical events.

Enhance workflows and reduce costs: Reduce the manual effort required to process warranty claims as you can easily extract data from the TWAICE cloud which applies the highest standards on data storage and security.  

Be in a strong position for claiming warranties: TWAICE is an independent, trusted third-party analytics provider. With the data transparency you have from the TWAICE cloud, you can claim warranties backed by an extensive data set supporting your claim. 

Minimize Business Case Risks: An adaption of the operating strategy exposes the business case to additional warranty risks. TWAICE predicts the future impact on BESS performance warranties of existing and newly planned operating strategies, reducing the business case risk while enabling the deployment of the most economical operating strategy. 

Features

  • Warranty Dashboard: All warranty indicators in an up-to-date dashboard independent of suppliers: Capacity degradation, Roundtrip Efficiency, State of Charge and more
  • Warranty contract database: Warranty contracts and references from business cases are easily integrated and visualized. 
  • Customized Warranty Logic: Warranty penalties on cycles or SoH due to out-of-warranty operations (e.g. high temperature or resting SoC) are calculated automatically. 
  • Reporting: reports on the warranty status for internal reporting, customers, banks and insurance providers
  • Critical condition alerting: alerts for critical conditions or unintentional operations
  • Benchmarking storage operation: Comparison of target and actual storage operation in regard of business plan and warranties. 

Tracking and managing warranties to avoid technical and financial risks no longer needs to be a headache. With the TWAICE warranty tracker, you can easily check whether your battery energy storage systems are operating within the warranty-specified conditions.

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