Technical Due Diligence in Emerging Energy Technologies: A Focus on Energy Storage Solutions

Among the many emerging energy solutions, energy storage technologies — particularly battery energy storage systems (BESS) — have garnered increasing attention due to their role in stabilising power grids, integrating renewables and enhancing energy security.

Investors and policymakers are also exploring multiple innovative energy solutions to meet the growing demand for clean and efficient power. These technologies include green hydrogen, advanced nuclear technologies, and carbon capture, utilisation and storage (CCUS). Each offers potential but also presents technical and financial challenges that require careful evaluation. Among these, energy storage systems stand out as one of the most immediate and commercially viable options for supporting renewable integration and improving grid reliability.

Growing Importance of Energy Storage Solutions

Renewable energy sources such as solar and wind are intermittent by nature, generating electricity only when the sun is shining or the wind is blowing. This variability poses challenges for grid stability, making energy storage systems critical for balancing supply and demand. Energy storage solutions, including lithium-ion BESS, flow batteries and alternative storage technologies, provide a means to store excess energy and deploy it when needed.

BESS implementation has emerged as the leading solution for large-scale energy storage due to its efficiency, modularity and declining costs. However, despite their advantages, BESS projects require thorough technical due diligence to address key challenges such as battery degradation, thermal management, fire safety and system integration.

Technical Due Diligence in BESS Projects

While BESS projects offer numerous benefits, improper deployment or inadequate assessments can lead to underperformance, safety risks and financial losses. Effective technical due diligence for BESS should encompass:

• Technology assessment. Different battery chemistries — such as lithium-ion, sodium-ion and solid-state batteries — have varying performance characteristics. Due diligence should evaluate factors such as energy density, cycle life, efficiency and degradation rates to determine suitability for specific applications.
• Safety and risk management. Battery safety is a major concern, particularly for lithium-ion technologies, which are prone to thermal runaway. Due diligence must assess fire protection systems, thermal management solutions and compliance with safety standards.
• Grid integration and performance modelling. Energy storage must seamlessly integrate with existing grid infrastructure. Due diligence should analyse system compatibility, grid interconnection requirements and load management strategies for optimal performance.
• Supply chain and manufacturing evaluation. The global battery supply chain is susceptible to raw material shortages and geopolitical risks. Assessing supplier reliability, battery cell sourcing and manufacturing quality control is crucial to minimizing project risks.
• Life cycle costs and decommissioning. Beyond initial capital investment, BESS projects incur ongoing operational and maintenance costs. Technical due diligence should evaluate the total cost of ownership, degradation rates, warranty terms, and end-of-life disposal or recycling strategies.

On a recent BESS project, technical due diligence supported the evaluation of a multi-site portfolio by identifying design life considerations, maintenance strategies and thermal management risks before construction began. By highlighting these technical and operational factors early, the team helped inform investment decisions and contributed to the broader adoption of energy storage solutions.

Integrating engineering and consulting knowledge and experience provides a holistic evaluation of energy projects by:

• Assessing technical viability. Engineering teams can conduct in-depth analyses of technology performance, scalability and integration challenges.
• Identifying and mitigating risks. By leveraging real-world engineering experience, consultants can anticipate potential technical failures and design mitigation strategies.
• Staying compliant and safe. Knowledge of industry standards and regulatory requirements allows projects to meet safety requirements and operational criteria.
• Optimising project economics. Technical insights help refine project financial models by factoring in realistic performance expectations, maintenance costs and life cycle considerations.

As energy technologies continue to evolve, investors, developers and policymakers must prioritize technical due diligence to navigate uncertainties and unlock the full potential of emerging solutions.

The energy transition is accelerating quickly, with emerging technologies offering new opportunities for sustainable power generation and storage. Still, careful evaluations are necessary to be ready for inevitable challenges. With technical due diligence — focused on technology performance, safety, grid integration, supply chain risks and life cycle costs — these innovations will not only be promising on paper but also offering viable, real-world opportunities.