Inverter Efficiency: Key to Performance of Modern Battery Storage Systems

True efficiency drivers in battery storage: the inverter

Battery storage systems are a crucial component of the energy transition – they stabilise grids, integrate renewable energies, and enable flexible electricity trading. While attention is often focused on the battery cells, the key to efficiency and cost-effectiveness usually lies in another component: the inverter.

As the interface between the battery and the grid, it is largely responsible for how much energy can actually be used and how profitable the overall system is.

The role of the inverter in the battery storage system

An inverter in the battery storage system converts direct current (DC) from the battery into alternating current (AC) for the power grid and vice versa. It thus ensures a stable connection between the storage system and the grid.

Modern systems use bidirectional inverters that react flexibly to grid requirements and market prices. They are also responsible for:

• Inverter efficiency: Losses due to inverters are typically 1-4% and have a significant impact on overall efficiency.
• Grid compliance and power quality: Ensuring that voltage, frequency, and reactive power comply with grid standards.
• Integration into the energy management system (EMS): Optimisation of charging and discharging cycles, minimisation of losses, and battery degradation.
• Real-time monitoring and control: Recording of current, voltage, temperature, and system status.

This makes the inverter an intelligent link between technical performance and economical operation.

Small losses, big impact: How inverter efficiency is created

Inverters are never loss-free. Their efficiency curve rises with the power output; at high loads they achieve up to 97 or 98 % efficiency, while they are significantly less efficient in partial load operation.

Applications such as frequency regulation in particular often operate at low power levels. Part-load losses have a particularly negative effect on round-trip efficiency (RTE). The RTE describes the proportion of energy that is available again after a complete charging and discharging cycle.

The most important types of loss are

• Switching losses: these occur when the semiconductors are switched on and off.
• Ohmic losses: They increase with the current flow and lead to additional heat generation at high loads.
• Standby losses: These occur when auxiliary systems consume energy even when idle.

Even a few percentage points of efficiency loss have a direct impact on the economic efficiency of a battery storage system.

What does round-trip efficiency (RTE) mean?

Round-trip efficiency (RTE) describes the proportion of energy that is available again after a complete charging and discharging cycle. Put simply: If a customer feeds 100 MWh of energy into the storage system and can then withdraw 90 MWh, the RTE is 90%. The difference—in this case, 10 MWh—is lost due to conversion, transmission, and control losses.

For operators and investors, RTE is therefore a direct measure of the usable energy and real profitability of a storage system. The higher the RTE, the more of the purchased or generated energy can actually be resold – and the greater the economic benefit.

The RTE is therefore the most efficient measure of system quality: it integrates battery, inverter, and system losses into a single, tangible key figure

Efficiency as a decisive factor in the economic viability of battery storage

The influence of round-trip efficiency (RTE) on different use cases.
The influence of RTE will be explained in more detail using the markets for system services and energy trading as examples.

• System services (e.g., FCR, aFRR):
  In these markets, in some cases only the power provided is remunerated, not the energy actually delivered. A higher RTE improves economic efficiency only marginally here, as energy losses are less significant.
• Trading/arbitrage:
  In energy trading, every kilowatt hour counts. Here, the RTE directly determines how much energy is available after a charge-discharge cycle – and thus also how high the revenue is.

  Example:
  A battery storage facility trades 100 MWh on the spot market at a spread of €300/MWh.

• • With an RTE of 86%, this results in proceeds of around €25,800.
  • With an RTE of 94.6%, the proceeds rise to around €28,380 – an increase of €2,580, or 10% (which corresponds to the relative increase in RTE).
• Trading/arbitrage and system services combined:
  Many projects market storage on different markets simultaneously. Our own analysis for a project with 0.81 MW and a 1 MW PV system has shown that an RTE increase from 86% to 94.6% results in additional revenues of approximately 4%.

 

Why RTE is becoming more important

To understand this, we need to look at the markets and future forecasts. Data from the Power Barometer 2025 shows that day-ahead price spreads in Germany have stabilized at a significantly higher level since 2021 – from an average of €29/MWh in 2019 to €109.5/MWh in 2024.

At the same time, Modo Energy’s forecasts based on developments in the UK indicate that energy trading will become more important in the future. It can therefore be assumed that not only will more projects be used in energy trading, but spreads will also remain high.

This makes it clear that the more projects rely on energy trading and arbitrage, the greater the impact of each efficiency increase on profitability.

In addition, capex costs are also falling sustainably, shifting the focus increasingly from investment to operational efficiency. A high RTE is becoming a decisive competitive differentiator.

Relationship between the RTE and the internal rate of return (IRR)

The influence of RTE on the internal rate of return (IRR) is not linear, but nevertheless significant. While revenues change proportionally with RTE in the trading use case, IRR rises more slowly because it also depends on other parameters such as investment costs, operating costs, and term.

As analyses by Modo Energy show, efficiency gains of around 5% (e.g., from 81% to 86% RTE) can increase the IRR of a typical project by around 1 percentage point and, at the same time, shorten the payback period by around one year.

These effects are amplified the more the storage is used in energy trading or the longer the planned operating period, as the higher revenues accumulate over many cycles.

Data analysis as the key to higher inverter efficiency

Modern battery storage systems generate huge amounts of operating data that can be used to leverage efficiency potential.

With the help of intelligent data analysis, operators can:

1. Optimise power distribution
   If a 100 MW system is operated with 20 inverters, it is more efficient to run only two to three devices close to full load instead of all of them in partial load operation. This minimizes standby and switching losses – the RTE increases measurably.

2. Detect faults at an early stage
   By continuously monitoring load distribution, asymmetries or temperature deviations, faults can be detected before they lead to failures. This ensures availability and reduces maintenance costs.

3. Monitor ageing and efficiency losses
   By evaluating voltage, current and temperature curves, ageing processes can be detected at an early stage and maintenance intervals can be planned in advance. The cloud-based remote monitoring of STABL battery storage systems provides real-time data down to cell level and in the single-digit second range. As a result, operators know more and have maximum transparency about the status of their storage systems. They benefit from predictive maintenance instead of reactive maintenance, higher availability and a longer service life, as well as in-depth analyses for greater safety and profitability.

Conclusion: Inverter efficiency = profitability

The efficiency of the inverter is far more than just a technical indicator: it is a decisive lever for the profitability, reliability and sustainability of battery storage systems. STABL Energy develops innovative architectures with its modular multilevel inverter technology that minimize losses, extend life span and maximize economic operation. Because every percentage point in inverter efficiency is hard cash.