The rapid growth of energy storage is creating new opportunities for manufacturers to bring batteries to the market, and project developers and owners are integrating them into their systems, often relying on the vendors for the information they need to make purchasing decisions and mitigate risk. With more and more options it’s sometimes hard to get a full understanding of trends and risks.
Because we are continually testing batteries from many manufacturers, DNV sees industry issues before most people do, but our experts aren’t always able to talk about them because of sensitivity to confidential information. However, as projects continuously start to pop up, we’re usually able to see industry trends developing about 1-1.5 years before the rest of the industry catches on. When we propose testing programs, we’re getting at something important. If you see us roll out a new service, it means we’re solving a problem that you might not know that you have.
DNV offers two types of testing services that directly support technical due diligence and independent engineering (IE) for energy storage projects.
You might think you don’t need these services, but let me tell you why you’d benefit from testing.
Here is what we offer, and why:
Product Qualification Program (PQP) testing: This testing verifies the warranty. It verifies the way the system was built and how it will respond to controls for its intended market. This test data allows DNV to put certainty on a warranty verification, rather than simply looking at a battery spec sheet and stating “yup, looks reasonable.” We don’t take the battery manufacturer’s word for it. Neither should you.
Safety testing: the safety issue is now very real for many project owners, developers, and EPCs. People have been injured and failures have been public. It isn’t speculation anymore—at least for the rest of the public. While there is much noise about which standards are most relevant, all of them are circling around the fundamental issues of whether or not battery cells can cascade through a module and whether modules can cascade through a rack. There are two main risks of battery fires regardless of how they start: 1) how fast will it grow (cascading rate); and 2) how the explosive gases are managed. That’s it, that’s the problem in a nutshell. There is a lot more detail, but this is the risk the owner needs to understand. So we test, we model, we analyze the data, and we look at the worst case scenarios to determine if the materials are correctly selected, the fencing perimeter is adequate, the extinguishing method and media are appropriate, and if the design is prone to cascading.
Let me break it down for the supply chain. This is why you need testing.
DNV’s PQP tests for the annual release of The Battery Performance Scorecard cost less than 1% of a project, but they can be the difference between mitigating a risk before COD or millions in liquidated damages and arbitration in a couple of years. That’s a heck of a deal. I’ll have to speak to our groups about increasing our prices. (You can pre-register for our 2019 Battery Performance Scorecard scheduled to be released later this year).
Safety tests have a similar ratio, and if they scale to the full system, they are again only about 1-2% of the total project cost. In some jurisdictions, the safety tests are a barrier to whether or not a project gets built. Again, spending 1-2% to get the rest seems pretty darn reasonable.
Here’s how this value breaks down for the supply chain:
If you are an owner: do you take the vendor’s word for it? I don’t think I need to say any more.
If you are a developer: the projects you develop have an effective credit rating. The vendors you use can enhance or detract from your credibility. If you have access to quality data that verifies a warranty and demonstrates that a system is meeting industry best practices for safety, you’re going to sell more projects. Just build the testing into your pro forma and consider it a cost of doing business.
If you are an EPC: you guys are on the fence. Many of you have secured strong supply agreements with system integrators or battery vendors and you are effectively on the same side of the table with them. Lately, does that seem like a good practice? The battery vendor can expose you to risk. PQP and safety testing helps you gauge your risk exposure. Since the EPC is usually first in line for LD’s, you’re the one most exposed. As above, consider PQP and safety testing a cost of doing business with a 100x return.
If you are a system integrator: maybe these are your batteries. Maybe they are not. You’ll have to offer a factory defects and workmanship warranty, at a minimum. Guess what? LD’s flow downhill. You can either continue the practice of self-certifying your product or you can have your customers tell you that they need independent verification of your products, at which point you no longer have control of what happens with that data. Wouldn’t you rather control your own destiny and commission the testing yourself? And once you do that, you’ll align yourself with your customers in their best interest. Seems like good business practice to me.
If you are a battery manufacturer: the data to solve performance and safety risks resides in your hands, in your buildings, and your engineer’s heads. But traditionally, the battery manufacturing industry does not share this data. This is a problem. Like the system integrator, battery manufacturers could go a long way in commissioning independent testing. Look at it this way: a PQP or safety test with us on one battery model number can be used across multiple projects and multiple customers. You can get 100x return on your first project, and everything that comes after just improves your return on investment. You stand the most to gain from this testing. Why aren’t you doing it?
Testing helps everybody. It is one thing to have someone say to you “oh sure, this will work for you” and it is entirely different to look at data that says “it works”. If you had $20M to spend, what kind of assurance would you prefer?
In my next blog, I’ll tell you about our new digital delivery of services that allow you to keep your data, have access to it whenever you want, and even run custom Battery XT predictions yourself.
Considering testing? Contact me today and I’ll give you a service that is one of the best investments you’ll make for your business.