For much of the past decade, the primary challenge in renewable energy has been achieving scale, through developing and deploying new projects fast enough to meet growing electricity demand. However, increasingly, the constraint is no longer simply building capacity but connecting it effectively.
Rising electrification and the rapid growth of energy-intensive sectors, such as data centres, are placing additional pressure on already constrained electricity grid networks and also making it more difficult to connect new projects quickly, due to limited capacity and stability concerns. According to the DNV ETO North America 2025, in North America alone, electricity demand is projected to increase by around one-third by 2040, with data centres expected to account for up to 16% of total demand, placing unprecedented strain on existing grid infrastructure.
In this context, BESS storage is emerging as an enabler of grid access itself. By providing dispatchable capacity, and reducing the impact of large loads at the point of connection, BESS storage allows new assets to integrate more efficiently within existing grid constraints. This development reflects a broader transition in the energy system, where flexibility is a prerequisite for growth.
However, it is important to recognize that co-location is not a universal solution. Its success depends on careful design and operational strategy. When executed effectively, though, it offers a powerful way to extend the value of existing infrastructure in a complex system.
Co-location benefits and opportunities
Co-location benefits and opportunities
At its core, co-location is about making better use of what is already available. By sharing infrastructure such as land, transformers, and grid interconnections, co-located projects can reduce duplication. By enabling access to capacity markets, co-located BESS supports revenue stacking strategies that can significantly improve project bankability.
At the same time, storage enhances system reliability. By smoothing intermittency and supporting grid stability, BESS helps transform variable renewable generation into a more consistent and predictable energy source. Integrating storage alongside generation, co-located systems enable assets to operate more flexibly as BESS can absorb excess generation that might otherwise be curtailed and shift it to higher-value periods.
This change is already visible at system level. The DNV ETO North America 2025 underscores that grid-connected battery capacity in North America is expected to increase 25-fold by 2040, with almost 60% of this capacity co-located with solar generation, underlining the growing role of co-location as a standard deployment model rather than a niche approach.
For co-located systems, modular architectures, and advanced control technologies are enabling developers to shorten deployment timelines, optimize grid integration, and bring projects online faster. Here, the concept of “Speed to power” is becoming a defining factor in project competitiveness. Solar remains one of the cheapest energy sources, but on its own it offers limited flexibility, while pairing it with BESS enables greater energy independence.
The DNV ETO North America 2025 points out that this urgency is reinforced by a growing imbalance between supply and demand. In the US, peak demand is expected to increase by around 80 GW between 2025 and 2030, while only around 22 GW of new dispatchable generation is currently planned.
Regional and local considerations
Storage can be treated as a generator, a load, or a hybrid asset depending on the region
While battery energy storage is now widely recognized as a critical grid resource, the rules governing how it connects, operates, and earns revenue still vary significantly across regional transmission organizations (RTOs). RTOs manage wholesale electricity markets and grid operations across different regions, each with its own market structures, tariff rules, and technical requirements.
Although federal policy, particularly FERC Order 841, has pushed to remove barriers and open energy, capacity, and ancillary services markets to storage, each RTO has implemented these rules differently, resulting in variations in participation models, metering requirements, and performance criteria. As a result, developers and asset owners face an uneven landscape where storage can be treated as a generator, a load, or a hybrid asset depending on the region.
This evolving regulatory environment reflects a broader transition: markets are gradually adapting to the unique capabilities of storage, but full harmonization has not yet been achieved, which can create complexity for project development.
Community permitting strategies for projects including safety
Community relations and local permitting strategies for energy storage projects refer to the processes through which developers engage with local stakeholders and navigate zoning, regulatory approvals, and public acceptance to bring projects online. Unlike other infrastructure, battery storage is often located close to communities and can raise concerns around safety and environmental impact, making local engagement a critical factor in project success.
Effective strategies typically involve early and transparent communication with residents, local officials, and emergency services, helping to address concerns, particularly around fire risk and community impact, before they escalate into opposition or delays. This engagement also supports formal permitting requirements, which often include public consultations, zoning approvals, and environmental reviews.
As a result, strong community relations are not just a reputational consideration, but a practical necessity: projects that build trust and align with local priorities are more likely to secure approvals efficiently, while those that do not may face prolonged permitting timelines, redesigns, or even cancellation.
Technical and commercial considerations
Critical decisions around capacity sizing, dispatch strategy, and control systems
While the benefits of co-location are well understood, delivering them in practice often isn’t so straightforward.
From a technical perspective:
- Project design must carefully balance the relationship between generation and storage.
- Decisions around capacity sizing, dispatch strategy, and control systems are critical.
- Co-located assets must operate within the limits of a shared grid connection, which can introduce export constraints and operational conflicts if not properly managed.
On the commercial side:
- Developers must navigate the balance between contracted revenue (such as PPAs) and exposure to merchant markets, while also accounting for the impact of grid limitations on revenue capture.
- The result is a more dynamic but more uncertain financial model.
- Regulatory and permitting considerations add a further layer of challenge.
- Storage is still treated differently across many markets, with evolving rules around market participation, safety, and compliance.
- As a result, project success is often shaped as much by local policy frameworks as by technical design.
Asset owners are increasingly operating large and diverse fleets
In addition, the challenge extends beyond individual projects to the management of entire portfolios. Asset owners are increasingly operating large, diverse fleets of assets, each with their own performance characteristics and market exposure. Integrating storage adds another layer of complexity, requiring coordinated control, visibility, and a deeper understanding of asset behaviour over time.
This is where data-driven solutions play a critical role. Advanced monitoring, integrated control systems, and lifecycle management capabilities enable operators to:
- Track performance in real time
- Optimize dispatch strategies across hybrid assets
- Identify inefficiencies and improvement opportunities
- Ensure compliance with evolving grid and regulatory requirements.
Co-located project control solutions at GPM
These challenges, particularly around dispatch optimization, shared grid constraints, and market participation, require coordinated control across hybrid assets.
At GreenPowerMonitor, a DNV company (GPM), Solutions such as GPM’s EMS and Hybrid EMS (HEMS) are designed to support this level of complexity, providing the visibility and control needed to manage co-located systems effectively and maximize their long-term value. GPM’s solutions for BESS and hybrid projects include the following:
- Enhanced Energy Management System (EMS), improving battery storage performance by optimizing energy dispatch, prolonging asset lifespan, and maintaining grid reliability in BESS storage projects.
- Hybrid Energy Management System (HEMS), ensures hybrid project reliability and efficiency, enabling seamless coordination between PV and battery energy storage systems (BESS), optimizing internal power flow for efficiency, cost-effectiveness, and grid compliance.
- Power Plant Controller (PPC), included in the EMS and HEMS, and acts as a bridge between renewable energy generation and the grid. As a standalone solution the PPC is designed for conventional renewable power plants with unidirectional power flow, such as PV and Wind.
Additional features include EMS Logic to help in complying with grid codes worldwide, and Battery Management System (BMS) for improving operational efficiency and flexibility.
- GPM Horizon for multi-tech portfolios (solar, wind, and storage), offers multi-technology monitoring and advanced analytics. GPM Horizon includes near real-time analytics and alerts, KPI tracking, and automated reporting.
Conclusion
The DNV ETO North America 2025 highlights that structural challenges in the grid are becoming more pronounced. Interconnection backlogs and permitting delays can slow project deployment, reinforcing that grid access, rather than generation potential, is increasingly the primary constraint. The ability to connect, integrate, and optimize assets within existing grid infrastructure will determine which projects move forward and which are delayed.
In this context, co-located BESS is playing an increasingly critical role. It is not only enhancing asset performance, but enabling grid access, helping developers mitigate connection constraints, and make more efficient use of network capacity.
However, realizing this value depends on more than simply adding storage. It requires careful system design, coordinated control, and a deep understanding of market, regulatory, and operational dynamics. Looking ahead, the next phase of the energy transition will not be defined by how much renewable capacity is built, but by how effectively it is connected and optimized within a dynamic grid environment.
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