State of Health (SOH) – The Health Indicator of Battery Energy Storage Systems
State of Health (SOH) describes the aging condition of a battery and indicates how much of its original performance capability is still available.
In large-scale Battery Energy Storage Systems (BESS), SOH is one of the key metrics for operations, commercialization, and asset management. It largely determines how much energy the system can actually deliver and how its economic value evolves over the project lifetime.
While State of Charge (SOC) reflects the current charge level, SOH captures the long-term evolution of the system: how much capacity has been lost over months and years, which operating ranges are still realistic, and when operators need to adjust their strategy.
State of Health (SOH) in the BESS Context: Distinction from State of Charge
SOH vs. SOC: “Health” vs. “Charge Level”
SOH and SOC are often considered together in operation, but they describe fundamentally different aspects:
- State of Charge (SOC): The current charge level of the battery in percent, comparable to a fuel gauge.
- State of Health (SOH): The aging state of the battery, typically defined as the remaining capacity relative to its original nominal capacity.
This distinction is particularly important for large-scale storage systems because trading strategies depend on SOC windows, while long-term profitability is primarily driven by SOH development.
SOH Is Not Directly Measurable – It Is Calculated
In professional systems, the Battery Management System (BMS) calculates key state variables, including SOC and SOH, based on measured data such as voltage, current, and temperature.
Research institutions such as Fraunhofer ISE are actively developing algorithms for advanced state estimation in battery management systems.
Why SOH Is Economically Critical in BESS
A BESS is typically designed for commercial operation in energy markets, including sophisticated BMS and EMS architectures. In this setup, SOH becomes a key performance indicator for several reasons:
- Reduced energy availability: As usable capacity declines, the energy buffer for longer dispatch strategies is reduced.
- Shifting operational constraints: Many market products require not only power, but also sufficient energy over defined durations.
- Lifetime and value driver: Operators increasingly optimize not only short-term revenues, but also degradation to preserve long-term asset value.
- Warranty and verification: The BMS records operational data and enables verification of compliant operation in warranty cases.
What Does SOH Actually Mean? Capacity Is Central — but Not the Only Factor
Capacity-Based SOH
The most common interpretation is SOH as remaining usable capacity relative to the original nominal capacity. This is particularly relevant in BESS applications, since capacity is directly linked to business models.
Power-Related Performance
Although SOH is often reported in capacity terms, battery performance can also be limited by increasing internal resistance. This leads to higher losses and thermal constraints.
This is operationally relevant for high-power applications such as frequency regulation, where fast response and high power output are required.
A value like “90% SOH” is not meaningful without context. It must be clear whether it refers to capacity, power capability, or a manufacturer-specific composite metric.
How Is SOH in BESS Determined? Role of BMS, Testing, and Models
BMS as Computation and Protection Layer
The BMS is the protection and monitoring system at cell and module level, measuring voltage, temperature, and current. Based on this data, it calculates state variables such as SOC and SOH.
While the EMS defines the economic dispatch strategy, it must always operate within the safety boundaries defined by the BMS.
Online Estimation vs. Reference Measurement
In real-world operation, SOH is typically maintained as a model-based estimate. This estimate is continuously updated with operational data and periodically calibrated through defined events.
Common industry approaches include:
- Capacity-based estimation: Defined charge and discharge windows or test procedures show how much usable energy can be delivered between limits.
- Impedance-based diagnostics: These indicate aging and power capability and are often used as a complement to capacity-based SOH.
From a research perspective, state estimation and aging models are continuously improved to enable more robust SOH prediction across different load profiles, temperatures, and applications.
What Drives SOH Degradation in Practice?
For BESS, degradation results from a combination of calendar aging and cycle aging.
Fraunhofer ISE distinguishes between calendar aging tests and cyclic aging tests under varying temperatures and SOC ranges.
Key Operational Drivers in Large-Scale Storage
- Temperature management: Temperature strongly influences chemical aging processes. BESS systems actively cool or heat battery cells to maintain optimal operating conditions.
- Power profiles / C-rate: The C-rate describes the ratio of power to energy capacity. High C-rates increase thermal and electrochemical stress and accelerate degradation.
- Operational strategy: EMS quality is a key value driver because it must balance aggressive revenue optimization with degradation-aware operation.
- SOC window and symmetry requirements: For symmetric frequency containment reserve, an SOC around 50% is optimal to allow equal charging and discharging capability.
SOH in Operations: How EMS and Market Strategies Use It
The EMS processes market data, grid signals, and asset data such as SOC and SOH provided by the BMS. This enables several operational functions:
- Dynamic constraints: As SOH decreases, operating windows may be adjusted to protect safety and extend lifetime.
- Revenue stacking optimization: The EMS can switch between arbitrage and ancillary services while respecting technical limits.
- Long-term performance management: Modern EMS approaches incorporate degradation as an optimization objective to maximize asset lifetime value.
SOH, Lifetime, and “End of Life”: What Does 80% Really Mean?
In many contexts, an SOH below 80% is considered the End-of-Life threshold for primary applications, although secondary use may still be possible.
However, in utility-scale BESS, this “80% rule” is not a physical law but a reference value. Actual economic viability depends on the business model, energy demand, power requirements, prequalification rules, and residual value logic.
In stationary storage, the economic EOL threshold may realistically be closer to 60–70% SOH, since there is no range limitation constraint and usage can be more flexible than in electric vehicles.
As SOH declines, asset managers take targeted actions such as adjusting operating strategies, evaluating technical upgrades, or reassessing revenue pathways to actively manage performance risk.
Standards & Safety: Why SOH Must Not Be Viewed in Isolation
BESS systems are structured within standard frameworks for electrical energy storage, such as IEC 62933, which provides a system-level reference framework.
At cell and battery level, IEC 62619 defines safety requirements and testing procedures for industrial lithium batteries, including stationary applications.
For operators, this means: a high SOH is valuable, but it does not replace a robust safety and operational regime, including BMS protection functions, limits, thermal management, and documentation.
Frequently Asked Questions (FAQ)
What is a “good” SOH for a BESS?
A “good” SOH is generally close to 100% in the early years of operation, as it represents remaining usable capacity relative to nominal capacity.
The critical threshold depends on the application and market requirements, such as the energy demands of trading strategies.
Can the EMS improve SOH?
The EMS cannot reverse degradation, but it can slow SOH decline through degradation-aware operation.
It optimizes the balance between revenue generation and battery preservation while operating within BMS constraints.
What causes the strongest SOH decline in BESS operation?
SOH declines due to both calendar ageing and cycle ageing.
The strongest operational drivers are high temperatures, high continuous C-rates, and frequent operation at extreme SOC levels.
Does SOH below 80% automatically mean the end of the project?
SOH below 80% is often cited as an end-of-life reference threshold for primary applications, but it does not automatically mean the end of the battery’s usable service.
For stationary large-scale storage systems, the economic operating limit can also be in the range of 60–70% SOH.
Whether and how a BESS can continue to be operated profitably depends on the market strategy, technical requirements, and potential operational adjustments.
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