The supply side: a daunting journey for asset owners
For companies or individuals looking to own and operate BESS assets, the task is complex at every step:- Complex project lifecycle: The journey from planning to COD involves permits, designs, and contractors. The asset also needs to go through ancillary services prequalification after COD. Each step requires specialised knowledge.
- Unique technical and supply chain challenges: Batteries require specialised components that aren’t typical in traditional power generation. Knowing how, where, and what to procure in a complex global supply chain is difficult.
- New communication interfaces: The modern communications interfaces (IoT Box, Ancillary Services Pool Box, EZA Regler) are unique to BESS and difficult to integrate and manage.
- Ongoing operational complexity: Operations and maintenance presents continuous challenges — managing degradation, adhering to warranty conditions, and optimising to recoup substantial capital costs.
Barriers for new entrants and local players
- Distributed grid and new investors: As the grid becomes more distributed, smaller-scale BESS sites (connected at the DSO level) attract local investors such as farmers or small landowners. These parties typically have no prior energy infrastructure experience. For them, navigating financing, planning, commissioning, and operations is genuinely daunting.
- Lack of market transparency: The BESS market is still nascent:
- There are no well-established BESS futures markets for long-term price hedging.
- There is no widely accepted financial index for BESS revenue.
- Real information on what BESS assets should earn, or how to compare optimiser performance, is scarce.
- This opacity keeps the market primarily in the hands of a few established players with existing internal expertise.
Existing infrastructure owners face new complexity
Even experienced infrastructure owners find BESS fundamentally different:- Two-way trading: Unlike traditional generators that only produce, BESS assets charge and discharge. This requires new expertise around storage dynamics, round-trip efficiency, and degradation-aware trading strategies.
- Cross-market optimisation: Maximising revenue requires sophisticated strategies that arbitrage across wholesale markets while participating in ancillary services simultaneously.
- Unique integration: The BESS communication interfaces and O&M challenges are specific to this asset class and have no direct equivalent in conventional generation.
The offtake side: the “all or nothing” problem
Challenges are not limited to asset owners. For new optimisers or those looking to manage flexible capacity:- Contractual rigidity: The legal framework in the market typically supports long-term, whole-asset contracts. This creates an “all or nothing” problem — a new optimiser must convince an asset owner to hand over their entire asset under a long-term agreement, a major leap of faith involving significant sums.
- Trust and reputation: Asset owners strongly prefer established, trusted counterparties for offtake agreements. Getting that first MW under management is exceedingly difficult for new entrants.
- The catch-22 of experience: You can build trading strategies, but you cannot prove they work without access to physical infrastructure to dispatch. That makes it nearly impossible to build the track record needed to win new clients.
The BESS market’s barriers affect both sides — asset owners struggle with the complexity of building and operating, while optimisers struggle to get their first foothold. LAYR is designed to address both.