What is State of Health (SoH) in an industrial battery - and who is responsible?
Every industrial battery energy storage system (BESS) undergoes a natural ageing process from the day it enters operation. The ability to store and release e...
Every industrial battery energy storage system (BESS) undergoes a natural ageing process from the day it enters operation. The ability to store and release energy declines gradually over time. To make informed decisions about operation, maintenance, and economics, it is necessary to know the system's precise condition. State of Health is a central parameter here.
This article explains the technical mechanism behind State of Health, how the parameter is measured in practice, and what consequences a declining level has for the system's profitability. It also covers the regulatory documentation requirements that, in the coming years, change how responsibility is shared between owner, operator, and supplier.
State of Health as a core concept
State of Health (SoH) is an estimated condition indicator for the battery's health. The parameter is used to describe how much of the original capacity and performance the system is assessed to have remaining at a given point in time. Where State of Charge (SoC) tells how much energy is currently in the battery, SoH indicates how the system's condition is assessed relative to the original specifications.
In industrial contexts, SoH is a core factor in a battery energy storage system, because the figure is a central indicator of the system's remaining capacity and performance. A system with a high SoH sits closer to its original design performance, while a system with a lower SoH typically has reduced capacity, and the internal resistance in the battery cells will often have increased.
The technical mechanism behind the measurement
SoH is not a simple number that can be read directly with a single measuring instrument. It is a calculated value that the system's Battery Management System (BMS) continuously estimates from a set of underlying physical parameters. Different suppliers may use different methods for this estimation.
Capacity-based estimation: This method calculates SoH by comparing the amount of energy the battery can currently take in and deliver over a full cycle with the original nominal capacity. In practice, the method may require specific operating data or calibration sequences depending on the supplier's model.
Impedance-based estimation: As a battery ages, its internal electrical resistance rises. By monitoring this resistance, the system can assess the battery's health. Research shows that SoH estimation can be based on electrochemical impedance, which can give a useful indicative picture of the cells' physical degradation without requiring full cycles.
Model-based and data-driven methods: Modern systems often use complex algorithms. Here, voltage, current, and temperature history are combined in model-based and data-driven estimation methods. The algorithms compare the system's current behaviour with reference profiles to calculate the most probable SoH value.
Because calculation methods vary, SoH is not necessarily an identical number across different systems. Two suppliers can in principle show marginally different SoH values for the same physical installation depending on the chosen software model.
Acceptable levels and commercial consequence
An industrial BESS installation will experience degradation over time. That is a physical and chemical process, which should be assessed against the documented operating profile and the expected load patterns.
The rate of degradation is influenced by several operational factors. In particular, temperature history and the system's operating window are decisive for how quickly SoH declines. If a system often operates at high temperatures, or if it is constantly charged fully and discharged fully to empty, wear accelerates. Likewise, a high state of charge (SoC) over longer periods in lithium-ion batteries can increase degradation, depending on chemistry, temperature, and other operating conditions.
Where an SoH level is assessed as acceptable depends on the system's purpose and the specific requirements in the operating and warranty documentation. There is no general threshold that can be applied across installations without looking at the specific agreement and the measurement method used.
If SoH declines faster than expected, the system's operational and economic assumptions deteriorate. Uncertainty about lifetime and degradation can increase the need for oversizing and warranty reserves. A faster decline in SoH will typically reduce available capacity and thus the amount of energy the system can deliver between service events and replacements.
Responsibility and regulatory requirements
Monitoring of SoH is in practice typically a matter shared between the plant owner, those responsible for operations, and any service providers. New European legislation tightens documentation requirements, but it does not in itself set out the entire private contractual and responsibility allocation between the parties.
In the EU, SoH and related performance information are no longer only internal operating data. For rechargeable industrial batteries with a capacity above 2 kWh, specific requirements now apply for documentation of electrochemical performance and durability. The documentation must clearly explain the technical specifications and conditions used to measure or estimate the values.
From 18 February 2027, the requirements tighten further. Each individual industrial battery unit above 2 kWh must have an electronic battery passport. This passport must contain updated information on the individual battery unit's State of Health. Under the regulation, responsibility for ensuring that this information is correct, complete, and up to date sits with the economic operator that places the battery on the market.
In day-to-day operation, responsibility is typically shared among several parties. The EU requirements concern especially the economic operator's documentation and disclosure duties for the information that accompanies the battery on the market. The specific allocation of operation, service, and warranty remains contractually determined between owner, operator, and supplier. Standard frameworks for industrial installations point to roles for planners, owners, operators, constructors, and suppliers, but the practical allocation of responsibility depends on agreements, the operating setup, and the relevant standards.
SoH reporting requirements in a service contract
When a company invests in an industrial BESS installation, it is relevant to clarify how SoH is handled in service and warranty agreements. If the contract includes reporting requirements, it should state which method is used to calculate SoH, which data are included, and how often the value is updated.
It is also relevant to specify whether the reporting is based on capacity measurements, impedance, or a particular software model, so the parties can compare the figures against the same assumptions in the service agreement.
Overall perspective
State of Health is a central technical indicator of an industrial battery's condition and remaining lifetime. It is a calculated parameter that is affected by how the system is operated day to day. With the forthcoming EU battery passport requirements, SoH data become part of the system's formal documentation. For companies with industrial BESS installations, that means that understanding of SoH and access to transparent operating data can be important for planning and follow-up.