Governance Framework for Intelligent Digital Twin Systems in Battery Storage: Aligning Standards, Market Incentives, and Cybersecurity for Decision Support of Digital Twin in BESS

Abstract

Digital twins represent a transformative innovation for battery energy storage systems (BESS), offering real-time virtual replicas of physical batteries that enable accurate monitoring, predictive analytics, and advanced control strategies. These capabilities promise to significantly enhance system efficiency, reliability, and lifespan. Yet, despite the clear technical potential, large-scale deployment of digital twin-enabled battery systems faces critical governance barriers. This study identifies three major challenges: fragmented standards and lack of interoperability, weak or misaligned market incentives, and insufficient cybersecurity safeguards for interconnected systems. The central contribution of this research is the development of a comprehensive governance framework that aligns these three pillars—standards, market and regulatory incentives, and cybersecurity—into an integrated model. Findings indicate that harmonized standards reduce integration costs and build trust across vendors and operators, while supportive regulatory and market mechanisms can explicitly reward the benefits of digital twins, including improved reliability, extended battery life, and enhanced participation in energy markets. For example, simulation-based evidence suggests that digital twin-guided thermal and operational strategies can extend usable battery capacity by up to five percent, providing both technical and economic benefits. At the same time, embedding robust cybersecurity practices ensures that the adoption of digital twins does not introduce vulnerabilities that could threaten grid stability. Beyond identifying governance gaps, this study proposes an actionable implementation roadmap categorized into short-, medium-, and long-term strategies rather than fixed calendar dates, ensuring adaptability across different jurisdictions. Short-term actions include establishing terminology standards and piloting incentive programs. Medium-term measures involve mandating interoperability protocols and embedding digital twin requirements in market rules, and long-term strategies focus on achieving global harmonization and universal plug-and-play interoperability. International examples from Europe, North America, and Asia–Pacific illustrate how coordinated governance can accelerate adoption while safeguarding energy infrastructure. By combining technical analysis with policy and governance insights, this study advances both the scholarly and practical understanding of digital twin deployment in BESSs. The findings provide policymakers, regulators, industry leaders, and system operators with a clear framework to close governance gaps, maximize the value of digital twins, and enable more secure, reliable, and sustainable integration of energy storage into future power systems.

1. Introduction: Aligning Standards, Incentives, and Cybersecurity for Full Potential of Digital Twin-Enabled Battery Storage

1.1. Background: Batteries, Digitalization, and Governance Gap

Battery energy storage systems (BESS) are becoming indispensable in modern power grids, enabling greater integration of renewable energy and providing critical services such as frequency regulation, reserve capacity, and peak shaving [1]. As deployments scale up globally, maximizing the performance and longevity of battery assets has become a strategic priority for operators and investors [1]. In this context, digital twin technology—the creation of a dynamic digital replica of a physical system—has emerged as a promising innovation for battery management [2,3,4]. A digital twin continuously ingests real-time data from a physical battery system (temperatures, voltages, currents, state of charge, etc.) and updates a virtual model that mirrors the battery’s condition, behavior, and environment [5]. By fusing sensor inputs with advanced models (electrochemical, thermal, and even AI-driven prognostics), the digital twin provides an up-to-date, high-fidelity representation of the battery’s past, present, and predicted future states. This offers deep visibility into performance “blind spots” and failure modes that traditional battery management systems (BMS) might miss [5].

While digital twin technology is applicable across multiple domains, such as residential storage and electric vehicles (EVs), the scope of this paper is specifically on grid-scale battery energy storage systems (BESS). The governance framework, however, has broader relevance and could inform future extensions to residential and EV applications. This clarification ensures consistency in terminology and aligns the discussion with the paper’s primary focus.

1.2. Opportunities from Digital Twin Integration

Digital twins open new frontiers in battery asset optimization. They enable more accurate state-of-health (SoH) estimation and degradation tracking, allowing operators to schedule maintenance or cell replacements proactively before faults occur [1,5]. They also support enhanced operational strategies: for example, by simulating how different charging/discharging profiles or thermal management settings will impact battery life, digital twins help operators balance revenue generation with asset preservation [5,6]. In a Dutch 21.6 MWh battery project, a physics-based digital twin uncovered a 4% hidden loss of capacity that the on-board BMS had not detected, enabling a “trustable and precise” diagnosis of degradation and informing adjustments to operating strategy [5]. Such an insight translates into tangible benefits—higher uptime, improved efficiency, longer life, and ultimately greater return on investment for storage projects [1]. Moreover, digital twins can facilitate value stacking in energy markets: by predicting available capacity and response speed more accurately, a battery can safely participate in multiple services (energy arbitrage, frequency response, and reserve) without breaching safety or warranty limits, thereby unlocking new revenue streams. A central digital twin provides real-time battery data to enable accurate SoH-enhanced strategies and value stacking in battery energy storage systems (Figure 1).

1.3. Governance Challenges: Standards, Market Incentives, Cyber-Security

Despite these advantages, the deployment of digital twin-enabled battery storage at scale faces significant governance challenges. First, there is a lack of common standards and interoperability. Many digital twin solutions today are bespoke, with proprietary data formats, models, and interfaces. Without alignment on standards, integrating different systems or ensuring vendor-agnostic continuity over a battery’s 10–15-year life is difficult. Second, market incentives and regulatory frameworks are not yet calibrated to encourage the use of digital twins. The added value of enhanced monitoring and predictive control—such as life extension or improved reliability—is often not explicitly rewarded in current market designs or asset valuations. In some cases, rules even discourage innovative operating strategies. For instance, rigid performance measurement or warranty structures might not account for the adaptive optimization that a digital twin enables. Third, cybersecurity risks loom large. Connecting BESSs to cloud-based digital twin platforms or remote monitoring opens new attack surfaces in what are now critical energy infrastructures [7]. A compromised battery digital twin system could feed false data or malicious commands to a storage plant, potentially triggering improper charging behavior, equipment damage, or grid instability. Moving battery control to the cloud allows for more sophisticated algorithms to extend battery life, but it “exposes the electrical grid to the Internet, enabling serious cybersecurity vulnerabilities” if not properly secured [7]. These vulnerabilities range from data breaches to adversarial control actions that could destabilize grid frequency or cause physical damage [7].

1.4. The Need for a Governance Framework

Taken together, these factors highlight that technology innovation alone is not enough. A coherent governance approach is required to safely and effectively integrate digital twins into the battery storage ecosystem. This includes (1) developing and adopting standards (for data, models, and communication) to ensure interoperability and build trust; (2) creating market and regulatory incentives that recognize and reward the benefits provided by digital twin-enabled batteries (e.g., improved reliability, flexibility, and transparency); and (3) instituting robust cybersecurity and resilience measures to protect these cyber–physical systems from threats. A recent review of Europe’s plans for a continent-wide grid digital twin underscored the same triad of needs: it identified fragmented governance, lack of standards and data-sharing protocols, insufficient incentives, and cybersecurity challenges as key barriers that must be overcome to realize the full potential of digital twin technology [8]. In other words, aligning standards, market incentives, and security is crucial not just for isolated projects, but for enabling system-wide deployment of digital-twin-enhanced assets.

This study offers a comprehensive governance framework for digital-twin-enabled battery storage, aiming to align these three pillars. We argue that standards (technical and data standards, as well as performance and safety standards), market design and regulation (policies, market rules, and business model incentives), and cybersecurity (secure-by-design architectures, compliance, and oversight) must be addressed in an integrated manner. The framework is globally relevant, drawing on examples and emerging best practices from leading jurisdictions—including international standards efforts (ISO/IEC), policy initiatives in the European Union and United States, and industry pilots in various countries—to ensure broad applicability.

Unlike a literature review, this work provides an original synthesis and argument, formulating concrete recommendations for stakeholders. The sections that follow provide a technical overview of digital twin architecture in battery systems; an analysis of governance gaps in the status quo; a three-pillar framework addressing standards, market incentives, and cybersecurity in depth; an integrated model for how these elements reinforce each other; and an implementation roadmap with short-, medium-, and long-term steps. Finally, the conclusion reflects on how aligning technical innovation with governance can accelerate a more secure, efficient, and intelligent energy storage future worldwide.

2. Battery Value with Digital Twins: Technical Overview and Challenges—Up to 5% More Battery Value by Deploying Digital Twins with Integrated Monitoring, Forecasting, and Market Optimization

Digital twins evolve from asset-level diagnostics to system-wide optimization [9], offering increasing value through roles like sophisticated observer, aging simulator, market advisor, and virtual power plant. Figure 2 illustrates the increasing value of digital twins as they evolve from individual asset monitoring to system-wide integration. At the asset level, digital twins act as sophisticated observers that detect subtle signs of degradation and as aging simulators that forecast the remaining useful life of batteries. As integration advances, digital twins serve as market advisors, maximizing profitability while maintaining battery health. At the highest level, they function as virtual power plants, coordinating across fleets to optimize operations and enhance system resilience. This progression highlights how deeper digital twin integration supports both economic and operational benefits in energy systems.

2.1. The Digital Twin Advantage in Battery Storage

A digital twin of a battery system can be viewed as a cyber–physical pairing of the physical asset and its virtual counterpart. The physical component is the battery system itself—comprising cells, modules, battery management system (BMS), power conversion equipment, thermal management systems, etc. The virtual component is a software model that replicates the physical system’s behavior and state. Critically, there is a continuous two-way data flow between them. The digital twin ingests real-time operational data from the battery (e.g., currents, voltages, temperatures, states of charge) and possibly external data (ambient conditions, grid signals, market prices) and, in turn, can send back insights, predictions, or even control instructions to optimize the physical system [5,7]. This tight integration means that the twin is not a static model but a living model continuously updated to reflect the battery’s condition.

2.2. Architecture

A typical architecture of a battery digital twin has a physical battery with sensors and control devices that is linked via secure data connections to a cloud-based digital twin platform [10,11,12]. Real-time data feeds into physics-based and data-driven models that simulate the battery’s electrical, thermal, and aging behavior. The digital twin outputs analytics (state estimation, predictions, and optimal operating instructions) that inform decisions by operators or automated controllers. Aligning such technical architectures with standards and secure interfaces is crucial for interoperability and trust [13].

At the lowest layer, sensors and control devices on the physical battery system collect data and ensure basic safety (voltage/cell balancing, overtemperature protection via BMS). Through an IoT gateway or local controller, this data streams to cloud or edge computing platforms where the digital twin’s analytical engines reside [13,14]. The digital twin’s core is usually a suite of models: electrical models (to calculate state-of-charge and dynamic response), thermal models (to track temperatures and heat transfer), and degradation models (to predict capacity fade and resistance growth over time) [6]. High-fidelity electrochemical models like the Single Particle Model (SPM) or equivalent circuit models can capture cell behavior, sometimes augmented by machine learning to improve state-of-health estimation [15]. The twin integrates these models with incoming data to estimate unmeasured states (e.g., internal cell temperatures and state of health) and to forecast future performance (e.g., remaining useful life under different use scenarios) [15]. Surrounding these are data-handling and analytics components: streaming data pipelines process sensor inputs in real-time for immediate anomaly detection, while batch processing pipelines use stored data for trend analysis and retraining predictive models [13]. The architecture often leverages cloud services and databases (for example, time-series databases to store telemetry, and machine-learning services to run predictions) [13]. Finally, user interface and integration APIs allow operators, OEMs, or system operators to interact with the digital twin’s outputs through dashboards, alerts, or control system integration [13].

2.3. Use Cases and Benefits

With this architecture, the digital twin unlocks multiple use cases.

2.3.1. Enhanced Monitoring and Diagnostics

The twin serves as a sophisticated observer of the battery. It can detect subtle signs of abnormal degradation or stress that might not trigger alarms in the basic BMS. For instance, by comparing the model-predicted state of health with the BMS estimation, the twin in one project discovered a 4% discrepancy, indicating hidden capacity loss [5]. Early identification of such “blind spot” degradation allows operators to investigate and take corrective action (e.g., rebalancing modules and adjusting operating parameters) before the issue worsens. Digital twins thus improve the transparency of asset health for both operators and investors [1], potentially informing warranty claims or insurance assessments with an independent source of truth.

2.3.2. Predictive Maintenance and Life Extension

By continuously simulating aging processes, a digital twin can forecast remaining useful life and the impact of various use strategies on that life. For example, it can answer “what-if” questions: If we perform deeper daily cycling to earn more arbitrage revenue, how much sooner will the battery hit 80% SoH? Or, if we raise the battery’s temperature setpoint to reduce HVAC costs, will degradation accelerate? Such prognostic capability supports condition-based maintenance—scheduling outages or module replacements based on predicted wear rather than fixed calendars. It also informs operations: the twin might suggest operating at a slightly lower state-of-charge range to dramatically slow degradation for a particular asset [6]. Over a 10-year horizon, these optimizations can yield substantial life extension. Reniers and Howey (2023) showed that refining thermal management control via digital twin simulation improved a grid battery’s efficiency by 5 percentage points and preserved ~5% more usable energy after 10 years [6]. In economic terms, that means both lower degradation costs and more energy to sell.

2.3.3. Optimal Dispatch and Energy Market Integration

Batteries earn revenue through complex market interactions—energy arbitrage, frequency regulation, capacity payments, etc. [16,17,18]. A digital twin can enhance the decision-making intelligence for participating in these markets. By incorporating high-fidelity models of degradation into dispatch algorithms, operators can maximize profit while respecting health constraints. For instance, the twin can forecast the monetary trade-off of cycling the battery harder for a high price event versus the lost future value due to extra degradation. This enables aging-aware optimization, which studies have shown can markedly improve the net present value of battery projects [19]. Moreover, digital twins can help verify performance in fast-response services. Their high-resolution models can ensure the battery can safely follow a frequency regulation signal or offer synthetic inertia without overstressing cells. In short, digital twins act as a real-time advisor for market operations, aligning operational targets with both economic incentives and asset care.

2.3.4. System Integration and Grid Support

Beyond individual assets, digital twins can aggregate into fleet- or system-level twins. For example, a utility might have a digital twin for an entire fleet of storage assets or even a section of the grid. These can facilitate coordinated control, essentially functioning as a virtual power plant. Real-time data and predictive analytics from each battery’s twin can be fed into a network operations twin that optimizes across the fleet to provide grid services reliably. Importantly, the twin framework can incorporate external data like grid frequency or renewable forecasts [7,8]. This helps storage respond optimally to grid needs and can improve resilience. The European Union is actively exploring a continental-scale grid digital twin that would integrate many asset-level twins to enhance grid stability and planning [8]. In that vision, standards and interoperability (discussed later) are key so that disparate systems can federate their digital models.

2.4. Summary: Realizing Value Requires Governance

Despite these technical benefits, it must be emphasized that realizing value from digital twins is contingent upon the governance structures that support them. As the above use cases show, digital twins blur traditional boundaries—between asset and operator, between operational tech and IT, and between market and engineering domains. This creates new demands in terms of how systems communicate, how stakeholders share data and trust analytics, how business models compensate for added value, and how risks are managed. We turn next to examining these governance gaps in detail, as a prelude to our proposed framework.

3. Hidden Challenges: Why Governance Gaps Impede Progress—Close the Governance Gap for Scalable, Secure, and Profitable Digital Twin Deployment in Battery Storage

Figure 3 shows an integrated governance framework necessary to enable scalable and secure digital twin deployment. It highlights three critical pillars—standards, market incentives and regulation, and cybersecurity—that must be addressed to bridge existing governance gaps. By defining universal digital twin standards, aligning market incentives with system-wide benefits, and implementing robust cybersecurity requirements, stakeholders can overcome barriers and support the widespread adoption of digital twin technologies across energy systems.

While pilot projects and early deployments demonstrate the promise of digital twin-enabled battery storage, several hidden challenges have become apparent. These often stem not from technological immaturity but from lagging governance mechanisms:

3.1. Fragmented Standards and Data Silos

Currently, there is no universal standard defining what a “battery digital twin” should include or how it should interface with other systems. Different vendors use different data schemas for battery telemetry and metadata; one company’s definition of SoH or stress factors may differ from another’s. This fragmentation hinders integration. For instance, an independent power producer cannot easily consolidate health data from multiple battery sites if each uses a proprietary digital twin platform. It also complicates scaling up. A battery’s digital records might not transfer well when ownership changes or when an asset aggregator wants to pool resources. The absence of standard interfaces is felt in practical scenarios like integrating a third-party digital twin service with a battery OEM’s BMS—often requiring custom engineering. These silos ultimately slow innovation and can increase costs, as every integration becomes a one-off effort. Interoperability standards are needed so that digital twins can “talk” to other systems (markets, operators, and manufacturers) seamlessly.

3.2. Unclear Market Signals and Business Case

Who pays for the digital twin and who reaps the rewards? This question is at the heart of incentive misalignment. Developing and maintaining a high-fidelity digital twin incurs costs—sensors, connectivity, cloud computing, software licensing, and analytical expertise. If storage operators are to invest in these, they need to see a return. Yet many market designs and regulatory regimes do not explicitly reward improvements in reliability or lifespan. For example, a grid operator might pay for delivered kW of frequency response but not give any credit for a battery that, thanks to its twin, can guarantee availability with less degradation uncertainty. Likewise, current contracts might penalize a battery for underperformance but have no mechanism to credit proactive health management. In the absence of explicit incentives, the business case for digital twins may rely on the asset owner’s internal assessment of life-cycle savings, which can be undervalued or hard to finance. Regulatory guidance could encourage incorporating things like SoH-based capacity ratings or performance insurance that monetizes the benefits of a digital twin. Additionally, split incentives can occur. An energy storage operator might bear the cost of digital twin deployment while the bulk of benefits (e.g., deferred grid upgrades and improved resource adequacy) accrue to the wider system or consumers. This calls for policy and market reforms to align private incentives with system benefits, ensuring those who invest in these innovations can capture fair value.

3.3. Cybersecurity and Privacy Risks

By design, digital twins rely on connectivity and data sharing—traits that introduce cyber risk in a sector that traditionally prioritized safety and physical security [20,21,22]. Battery systems historically were relatively self-contained. Now, with digital twins, they become part of an IoT ecosystem accessible over networks. Attack surfaces expand. Adversaries could attempt man-in-the-middle attacks on sensor data streams, ransomware targeting cloud databases of battery models, or issuing malicious control commands if they breach a twin’s interface. There is also a risk of data exposure—battery operational data might reveal sensitive information (like when a customer site uses power, or vulnerabilities in an operator’s fleet). In 2023, the U.S. government highlighted that, as batteries and other distributed energy resources proliferate with networked control, the power sector faces “emerging cybersecurity challenges” and risks “locking in” vulnerabilities if security by design is not urgently adopted [23]. Notably, utilities are used to compliance regimes for grid equipment, but many new storage deployments involve third-party owners and manufacturers who are outside traditional oversight [23]. This means roles and responsibilities for cyber resilience are poorly defined—who is accountable if a battery aggregator’s cloud platform is hacked and causes grid instability? Without clear standards and enforcement, there is a danger that uneven security practices will lead to a weakest-link problem, undermining overall grid safety [8]. Strong governance must therefore extend into cybersecurity requirements for digital twin systems and clarify liability and coordination in the event of incidents.

3.4. Regulatory Uncertainty and Gaps

Finally, broader regulatory frameworks have yet to catch up with digital twin technology. Data governance is one gray area. Regulations like Europe’s GDPR focus on personal data, but what about industrial battery data? Questions arise, such as can a battery OEM restrict a facility owner from using third-party digital twin analytics on “its” battery data? Should real-time health data be shared with grid operators for reliability oversight? Regulators have not uniformly addressed data-sharing mandates or protections in this context [8]. Additionally, certification and safety standards for BESS (e.g., UL and IEC standards) do not yet incorporate digital twin components—for instance, how to certify a control system that relies on predictive algorithms. There is a need for regulatory sandboxes or pilot programs to experiment and define how digital twin-enhanced operations can meet safety, reliability, and market rules. Without this, operators might be wary: e.g., using a digital twin to dynamically adjust a battery’s capacity rating or operating limits could conflict with static limits in permits or interconnection agreements. Clarifying and updating regulations to accommodate the adaptive, data-driven nature of digital twins will be crucial to avoid inadvertently discouraging their use.

In summary, the current landscape reveals a governance gap—technology is racing ahead, providing tools for better battery management, but the institutional frameworks to standardize, incentivize, and secure these tools are lagging. The next sections propose solutions to close this gap, structured around three key pillars: standards, market incentives and regulation, and cybersecurity. Each pillar addresses one dimension of the problem, and together, they form an integrated governance framework.

4. Pillar 1—Building on Standards: A Foundation for Interoperability and Trust: Standardize Battery Digital Twins to Cut Integration Costs and Build Industry-Wide Trust

Figure 4 outlines the key challenges in standardizing battery digital twins, categorized into four main areas: data and interface standards, ontologies and semantic standards, model validation and benchmarking, and harmonization across domains. Issues such as inconsistent data formats, inadequate battery ontologies, lack of benchmarking protocols, and regional fragmentation contribute to the overarching barrier of non-standardized battery digital twins, limiting their interoperability and scalability.

4.1. Why Standards Matter

Standards are the invisible infrastructure that enables complex ecosystems to function smoothly. In the context of digital twin-enabled battery storage, standards can ensure that a battery’s digital heartbeat—its data and models—can be understood and utilized across different platforms, organizations, and stages of the asset life cycle. They reduce the friction in adopting new technologies by providing common reference points. For digital twins, this spans terminology standards (so that “State of Health” or “remaining useful life” mean the same thing to everyone), data format standards (so sensors and databases interoperate), communication protocols (so a battery twin can safely interface with grid operator systems), and even model validation standards (so that claims made by a digital twin about a battery’s performance can be independently verified). In short, standards foster interoperability, compatibility, safety, and credibility [24].

4.2. Emerging Standards and Frameworks for Digital Twins

The good news is that international bodies have begun laying the groundwork. In 2023, the ISO and the IEC (the leading global standards organizations) released foundational standards for digital twins. ISO/IEC 30173:2023 established common concepts and terminology for digital twins [25], ensuring that all industries share a baseline definition of what a digital twin is and is not. This is critical for cross-sector understanding. A battery digital twin and, say, a building HVAC digital twin should use a consistent vocabulary when talking about their digital models and synchronization with reality. Additionally, work is underway on ISO/IEC 30188 (Digital Twin Reference Architecture) [26], which will likely provide a high-level blueprint of digital twin system components and relationships. Such a reference architecture can guide vendors and users in assembling twin systems with interoperable parts.

For industrial and energy systems specifically, the IEC is developing a series of standards. The concept of the asset administration shell (AAS) from Industry 4.0 is one relevant example—essentially a standardized digital representation for industrial assets, which can be seen as a type of digital twin container. The IEC’s efforts include linking digital twins with industrial IoT standards and security requirements [27]. Notably, IEC 62443, a well-established series of standards for industrial control system cybersecurity, is being referenced for securing digital twin implementations in industry [28]. Meanwhile, ISO’s committee on IoT and digital twins (ISO/IEC JTC 1/SC 41) has produced dozens of standards on connectivity, data processing, and security that underpin IoT systems [24]. SC 41 has a dedicated working group on digital twins (WG6) focusing on core specifications, as well as groups on IoT architecture and interoperability that feed into twin frameworks [24]. One example output is ISO/IEC TR 30172:2023, a report compiling use cases of digital twins across domains (energy included), to inform future standardization [29].

Beyond ISO/IEC, there are domain-specific contributions. The Digital Twin Consortium and industrial alliances have published reference architectures and taxonomies. The Open Geospatial Consortium (OGC) is working on standards for geospatial aspects of digital twins (relevant if one considers spatially distributed battery sites, for instance) [24]. In the manufacturing sector, ISO 23247 provides a four-layer framework for digital twins in factories, which—while focused on manufacturing—offers principles of separating physical, communication, twin, and user layers that could be applied to battery systems [24]. Indeed, ISO 23247 emphasizes how layering and standard interfaces can allow for the mixing and matching of components (e.g., using the OPC UA protocol at the device communication layer to integrate equipment data) [24]. Translating this to battery storage, one could envision standardized interfaces for battery telemetry (perhaps extending protocols like MQTT or OPC UA to cover battery-specific data points) and standardized data models for battery characteristics (leveraging something like IEC Common Data Dictionaries or even XML schemas for battery info).

4.3. Towards Standardization in Battery Digital Twins

Despite these developments, much work remains to translate high-level standards into practical tools for battery storage stakeholders. Here, we outline key areas and recommendations.

4.3.1. Data and Interface Standards for BESS

A priority is to standardize the data that flows between a battery system and its digital twin. What parameters should be measured, at what frequency, and in what units? For example, cell voltage measurements, temperature readings, battery rack power, etc., should have common naming conventions and formats. Standard communication profiles could be built on existing BMS protocols (like Modbus and CAN bus signals extended for cloud) with mappings to a common schema. Efforts by groups like the SunSpec Alliance (for solar + storage data) or IEC TC120 (electrical energy storage systems) could be used to define a battery digital twin profile. This would ensure that if you connect Vendor A’s battery to Vendor B’s digital twin platform, basic information (current, voltage, alarms, and SoH estimates) can be exchanged without custom coding. Regulators and industry consortia should push for an open data exchange standard—analogous to how the electrical characteristics of DERs are standardized (e.g., IEEE 2030.5 for solar inverters communications).

4.3.2. Model Validation and Benchmarking

To build trust, there should be guidelines or standards for validating a digital twin’s accuracy in representing a battery. For instance, test protocols could be established where a digital twin’s predictions (of capacity fade and of short-term performance) are benchmarked against real battery measurements in standardized duty cycles. This would allow for the certification of digital twin tools for certain uses (like a stamp of reliability). Standards for model interoperability are also useful—e.g., a standard way to describe a battery cell model so that it can be swapped out. The open-source battery modeling toolkit PyBaMM is one initiative toward common modeling frameworks, and if standardized interfaces are defined, different model libraries could plug into any twin platform [6]. This prevents lock-in to one proprietary model.

4.3.3. Ontologies and Semantic Standards

The digital twin community often uses ontologies—formal representations of knowledge—to ensure that machines can interpret data context [30,31,32]. Developing a battery ontology (covering terms like state-of-charge, depth-of-discharge cycles, calendar aging, etc.) and aligning it with broader energy ontologies will help automated systems reason regarding battery twins. The IEC’s Common Information Model (CIM) for energy might be extended to include battery health data, creating a standard semantic layer for integration with grid management systems.

4.3.4. Harmonizing Across Domains

Battery storage sits at the intersection of power systems, ICT, and electrochemistry [33]. Thus, its digital twin standards might borrow from or contribute to multiple domains. Collaboration is needed between standards bodies. For instance, the IEEE (which has standards for battery management systems and protocols like IEEE 2030.7 for microgrid controllers), and the IEC needs to ensure that their standards do not conflict and, ideally, complement. The European Union’s approach to require “harmonised standards and incentives across member states” for its grid twin initiative highlights that fragmentation, even between regions, can be a barrier [8]. Harmonization efforts via bodies like the International Energy Agency (IEA) or the Global Battery Alliance could disseminate best practices so that, say, a battery farm in Australia and one in California can follow similar digital twin standards, simplifying the job for global OEMs and software providers.

Crucially, the adoption of standards is what realizes their value. Policy can help here. Governments and regulators can reference these standards in procurement requirements, subsidies, or compliance mandates. For example, an energy regulator might stipulate that utility-owned storage above a certain size must implement a digital monitoring system that conforms to a defined standard for data reporting and cybersecurity. This would accelerate uptake. The short-term objective is to get basic standards in place (terminology and data exchange) and encourage voluntary adoption via pilot projects. In the medium term, standards for interoperability and security should be mandated in grid codes or market rules for large BESS installations, ensuring consistency. In the long term, a mature international standards ecosystem would allow plug-and-play digital twin modules, certified by globally recognized benchmarks, thereby significantly reducing integration costs and enabling a thriving market of third-party analytics and services on battery data.

To summarize this pillar, standards are the glue that will hold together the digital twin ecosystem. By speaking the same language and adhering to common protocols, stakeholders create a foundation of trust—operators trust the data, regulators trust the analytics, and vendors trust that they can participate without unfair barriers. As one NIST framework on digital twin security observed, “the adoption of and adherence to standards may ensure interoperability, safety, and cybersecurity… and engenders credibility and trust” [24]. Our governance framework places standards at its base, upon which market mechanisms and security oversight can build effectively.

5. Pillar 2—Market Incentives and Regulatory Design: Driving Adoption and Innovation: Design Market Incentives and Smart Regulations to Accelerate Digital Twin Adoption and Obtain Full Battery ROI

Figure 5 illustrates the three-phase pathway toward a mature digital twin ecosystem, beginning with barrier removal through pilot programs and guidance, advancing to formal changes such as standards implementation and accreditation, and culminating in a mature ecosystem characterized by optimized grid integration and refined market incentives. The increasing waveform amplitude symbolizes rising system complexity and integration depth as the ecosystem evolves.

Technology, no matter how promising, will not be widely implemented unless economic and policy conditions make it attractive to do so. The second pillar of our framework addresses the market and regulatory levers needed to spur the deployment of digital twin-enabled battery storage. The goal is to align financial incentives and the rules of the game such that the benefits provided by digital twins are recognized and rewarded, thereby creating a business case for their adoption and scaling innovative practices while safeguarding the public interest (reliability, safety, and consumer benefit).

5.1. Valuing Resilience, Efficiency, and Longevity

Digital twins confer several quantifiable benefits to battery storage operations: increased uptime and reliability, extended asset life, enhanced efficiency, and better performance in providing grid services. However, current market structures seldom put an explicit price on these attributes. We propose the following approaches to monetize the value add of digital twins.

5.1.1. Performance-Based Contracts

Move away from simply buying “a battery and its energy output” towards contracts that pay for outcomes like reliability or availability. For instance, a utility could contract a storage provider with a guarantee of X% availability and response speed over Y years. A digital twin helps the provider meet and document this guarantee through predictive maintenance and optimal operation. Such contracts would justify investing in the twin. Similarly, capacity markets (which pay for being available during peaks) could adjust rules to favor resources with proven health management. A battery that can show via its digital twin that it maintains, say, 90% state of health after 5 years while delivering contracted services could be rated more favorably (lower derating factors) than one without such a demonstration [1]. Regulators can encourage this by requiring evidence-based health reporting for long-term capacity resources.

5.1.2. Ancillary Service Premiums

In many grids, ancillary service markets (frequency regulation, reserves, etc.) have penalties for non-performance but no additional payment for high performance. Introducing a “performance premium” that rewards accuracy and reliability could benefit digital twin users. For example, frequency regulation signals often require batteries to follow an aggressive charge–discharge profile. A digital twin-enabled battery that precisely follows the signal with minimal degradation (because the twin optimizes the dispatch) provides more reliable service. The market could offer a bonus payment for resources that demonstrate lower error or faster response (both enabled by digital twin analytics). This creates a revenue stream tied to using the twin’s capabilities.

5.1.3. Insurance and Warranty Benefits

Insurers and warranty providers could incorporate digital twins into their risk models. A battery with a digital twin may have a lower risk of catastrophic failure (due to early fault detection) and slower capacity fade (due to careful management). This could translate into lower insurance premiums or extended warranty terms. If OEMs recognize that a customer is using a reputable digital twin system that adds transparency to how the battery is used, they might be willing to offer “digital twin certified” extended warranties (for example, guaranteeing throughput or performance for longer because they trust the battery will not be misused without detection). Such private sector incentives reinforce the economic rationale. Policy could assist by facilitating data sharing—e.g., ensuring operators have the right to share battery data with third-party insurers or analytics firms, avoiding contractual gag clauses by OEMs.

5.1.4. Grid Support Payments

As grids become more dependent upon energy storage, system operators value reliability and predictability. Some jurisdictions might consider availability payments or resilience payments for assets that can prove high dependability. For instance, during extreme events (storms, etc.), a battery that can be counted on to deliver its rated output is extremely valuable. Digital twins that continuously assess and forecast the battery’s capability could feed into such resilience assessments. Regulatory frameworks could establish mechanisms where storage operators receive additional compensation for maintaining a high state-of-health and being “always ready”—essentially a reliability-differentiated payment.

5.2. Regulatory and Policy Enablers

Regulators have a pivotal role in shaping an environment conducive to innovation. Several regulatory actions can underpin the market incentives.

5.2.1. Incorporating Digital Twins into Standards of Practice

Energy regulators and system operators can formally recognize digital twin-based monitoring as part of best practices for large BESSs. For example, grid codes or interconnection requirements might mandate an advanced monitoring and management system for batteries above a certain capacity, including predictive analytics for state of health. This does not force a specific vendor’s solution but establishes that operating a grid-connected battery should involve more than a basic BMS. An analogy is how phasor measurement units (PMUs) became standard in transmission grids for stability. Regulators encouraged their adoption post-blackouts. Here, the motive is to ensure that storage, which may be critical for grid balance, is managed with state-of-the-art tools. Such mandates immediately expand the market for digital twin solutions and embed them in project planning.

5.2.2. Data Sharing and Transparency Rules

Policy can require that certain performance and health data from storage resources be shared with grid operators or regulators, under appropriate confidentiality. If each battery’s digital twin data is reported (perhaps aggregated suitably) to a central reliability coordinator, it improves system visibility. The European Commission’s strategy for a unified digital twin of the grid is instructive. It highlights the need for “harmonized data-sharing practices and effective security frameworks” as prerequisites [8]. Regulators could set up data hubs or “energy data space” for sharing digital twin data while protecting sensitive details [8]. This not only aids system monitoring but also creates an expectation that digital twin data will be produced and used, hence motivating asset owners to implement them.

5.2.3. Regulatory Sandboxes for New Services

Digital twins may enable novel services—for example, a platform that aggregates small behind-the-meter batteries via their twins to provide grid services or a scheme where EV batteries with twins participate in energy markets dynamically. Rigid regulations can stifle these emerging models. Regulatory sandboxes (as pioneered in the UK and elsewhere) allow for the temporary relaxation of certain rules to pilot innovative concepts under supervision. Authorities should explicitly invite proposals leveraging digital twin tech—e.g., allowing a trial where a utility pays for “degradation management as a service” delivered by a third party using digital twins on its batteries. Insights from these trials can then inform permanent changes to market rules or interconnection standards.

5.2.4. Aligning Incentives with Asset Lifecycles

One challenge in storage is that project developers might flip assets after a few years and, thus, could be disincentivized to care about the end-of-life condition. Regulation can intervene by aligning incentives for long-term performance. For example, capacity market eligibility might require demonstrating a plan for maintaining a certain performance for 10+ years (again, something a digital twin can facilitate/document). Alternatively, if decommissioning or recycling rules penalize heavily degraded batteries, that implicitly rewards those who kept their battery healthier longer. Policymakers should consider the whole lifecycle impact. A battery that degrades less (due to good management) not only performs better but also lasts longer and defers new investments, aligning with sustainability. Policies that encourage resource efficiency indirectly promote digital twins (which help squeeze more life and usage out of each battery).

5.2.5. Market Design for Stacked Services

In many places, storage cannot fully stack revenues due to market design limitations or prohibitions on multiple uses. By reforming market rules to allow and encourage multi-use batteries (e.g., a battery providing both energy arbitrage and grid support services), we maximize the economic rationale for tools that optimize such multi-use, i.e., digital twins. If markets remain one-dimensional, the margin for benefit from a twin is narrower. Thus, regulators should update market participation models to be technology-neutral and allow storage to provide all of the services it is technically capable of, as long as it can manage the duty (with digital twins as a key enabler for managing complex duties). Digital twin models could enable coordination in local energy communities by transparently reflecting each asset’s capabilities, hinting that market mechanisms at the community scale can evolve using twin data [34].

5.3. Global Examples

Internationally, we see early moves aligning with these ideas. Brazil, for instance, has discussed new market designs to accommodate battery storage capabilities, including changes in dispatch and settlement to account for degradation costs [35]. In the United States, FERC Order 841 already required that storage resources be allowed to play in multiple markets. Building on that, some utilities are exploring contracts that include maintenance or performance guarantees. The US Department of Energy’s modernization plan explicitly calls out integrating BESS operators in cyber exercises and improving information sharing about threats [23], reflecting an understanding that operational coordination (likely facilitated by digital data from these assets) is key to security and reliability. In Europe, the EU’s Action Plan on Digitalizing the Energy Sector recognizes digital twins as crucial and emphasizes data availability, technical expertise, and cybersecurity as prerequisites [36]. Projects like TwinEU (Horizon Europe) aim to create conditions for interoperability and demonstrate business cases for grid digital twins [37]. These all feed into creating a favorable ecosystem.

It is important to note that, while some of the cited examples are directly focused on battery storage (such as the Dutch 21.6 MWh project, which applied a physics-based twin to detect hidden degradation), others represent broader digital twin initiatives. For example, the European TwinEU program and the U.S. DOE modernization plan encompass system-wide digital twin strategies that extend beyond storage to include grids and distributed energy resources. These broader efforts are nonetheless highly relevant, as they provide governance, interoperability, and cybersecurity lessons that can be adapted to the specific case of digital twin-enabled BESSs.

5.4. Short-, Medium-, Long-Term Regulatory Roadmap

To organize the implementation of these incentives and policy changes, we can think in terms of time horizons.

5.4.1. Short Term (1–2 Years)

Focus on removing barriers and signaling support. This includes launching pilot programs (with government or regulator sponsorship) that demonstrate digital twin benefits in operational settings. Regulatory bodies can issue guidance notes or white papers clarifying that using advanced digital monitoring is encouraged and may satisfy certain compliance needs (for example, using a digital twin to meet reporting requirements on asset conditions). Begin integrating basic twin data into existing reporting (e.g., include state-of-health trending as a required field in annual reports for large batteries). Also, adjust any “low-hanging fruit” in market rules, such as allowing storage to update its capacity rating periodically if justified by digital twin data, rather than a fixed derating from initial install.

5.4.2. Medium Term (3–5 Years)

Implement formal regulatory changes. Introduce standards of performance and possibly mandates for large-scale systems to have enhanced monitoring (likely after standards from Pillar 1 are in place to specify what that means). Roll out new market mechanisms or contract structures in procurement that explicitly factor in longevity and reliability. For instance, the next round of capacity auctions could require bidders to provide a degradation management plan (with digital twin usage expected). Develop an accreditation program for digital twin tools—perhaps run by national labs or certification bodies—so that regulators and insurers trust the outputs from these systems. Enhance cybersecurity regulations to cover third-party aggregators and tech providers involved with storage (tying into Pillar 3). The EU’s NIS2 Directive for cybersecurity will already require energy sector players, including potentially storage operators and their service providers, to adopt rigorous security practices [8]. By this stage, compliance with such requirements should be demonstrable (and digital twin platforms would need to be certified secure accordingly).

5.4.3. Long Term (5–10 Years)

Aim for a mature ecosystem where digital twins are an integral part of how storage is operated and valued. At this point, the regulatory focus can shift to fine-tuning incentives to ensure optimal outcomes for the grid. If most storage uses digital twins, the aggregated data might allow system operators to run higher-level optimization (essentially realizing the concept of a network of digital twins supporting grid management). Regulations might evolve to require that any resource contributing to critical grid stability functions has a verified digital model backing it—effectively making digital twins a norm akin to how reserve plants must have telemetry. Market designs might evolve into very granular and dynamic setups (e.g., real-time flexibility markets) that storage with digital twins can uniquely exploit. International coordination could lead to aligning these approaches globally, so that a storage project developer can expect similar treatment and incentives for digital twin use whether they build in Europe, Asia, or the Americas.

In crafting these policies, stakeholder engagement is key. Policymakers should involve battery manufacturers, software providers, grid operators, and consumers to strike the right balance. For example, consumer advocates will want assurance that the costs incurred for advanced digital systems truly lead to savings or improved service quality. Transparent pilots and sharing of success stories (e.g., reduction in frequency regulation costs due to more reliable battery response with digital twins) can build broad support.

Eventually, market and regulatory incentives ensure that the technical potential identified by engineers translates into real-world adoption. By valuing what digital twins provide—resilience, efficiency, intelligence—we create a virtuous cycle. More adoption leads to more data and innovation, which leads to better performance and lower costs, which further justifies adoption. This pillar works in synergy with standards (Pillar 1 ensures the playing field is common) and cybersecurity (Pillar 3, which we discuss next, ensures that as we lean on these digital tools; we are not introducing unacceptable risks).

6. Pillar 3—Securing the Digital Twin Ecosystem: Cybersecurity and Resilience: Embed Cybersecurity by Design to Prevent Grid-Scale Risks from Digital Twin Battery Systems

Figure 6 shows a comprehensive cybersecurity strategy framework for digital systems, illustrating the continuum from prevention to recovery. The key stages include secure by design, anomaly detection, standards adherence, coordination, recovery plans, compliance, and beyond defense. Each phase addresses specific cybersecurity functions, from initial threat prevention to coordinated response and post-attack recovery.

As battery storage becomes digitally twinned and network-integrated, it effectively joins the ranks of critical infrastructure in cyberspace. The third pillar of our framework addresses how to safeguard a digital twin-enabled BESS against cyber threats and ensure resilient operation. This is non-negotiable. Even the best standards and incentives will falter if cyber incidents undermine system reliability or stakeholder confidence. A multi-layered cybersecurity strategy must therefore be built into governance from the start, not as an afterthought [8].

6.1. Threat Landscape and Vulnerabilities

Digital twin systems expand the threat surface of battery storage in several ways.

6.1.1. Data Streams and Connectivity

Continuous data streams between physical batteries and their digital twins create pathways that could be intercepted or manipulated. If an attacker injects false data into the twin, the models might miscalculate the state of health or issue harmful control actions (e.g., telling a battery to charge when it is full, causing overcharge). The reference model of cloud-controlled BESSs highlights risks like attackers disrupting communications or inserting bad data that throws off grid frequency control [7]. In essence, every telemetry sensor, IoT gateway, and API endpoint is a potential ingress for malicious interference if not secured.

6.1.2. Cloud and Third-Party Platforms

Many digital twin implementations rely on cloud services or third-party platforms. These centralized data stores and analytic engines could be prime targets for ransomware or espionage. A breach in a multi-tenant cloud platform might expose or affect many battery systems at once. The interdependence means that even smaller operators, if connected through a cloud service, become part of a larger risk pool. Smaller entities like distribution operators often lack in-house cyber capabilities, and a single weak link among participants in a digital twin network can compromise others [8].

6.1.3. Integrated Control Loops

In advanced setups, a digital twin might actively send control setpoints to the battery system (for optimized dispatch or thermal management). This closed-loop control is vulnerable if an adversary gains access—they could potentially command batteries to trip offline, to oscillate, or even to self-damage by cycling aggressively. For example, coordinated false commands to multiple BESSs could induce grid instability or equipment failures. This crosses into cyber–physical attack territory, where digital intrusion causes physical consequences (akin to the famous Stuxnet attack on centrifuges, but here targeting batteries or inverters).

6.1.4. Supply Chain and Software Risks

The digital twin ecosystem involves various software components (firmware in BMS devices, cloud analytics code, etc.) [38,39]. Vulnerabilities in any of these (e.g., an unpatched OS, a bug in the twin software) can become entry points. The DOE has identified supply chain risks for battery systems, including the software and communication modules [40]. If a widely used battery controller or IoT device has a backdoor or weakness, many installations could be compromised en masse.

Huy et al. [41] emphasized that insider threats—ranging from data exfiltration and privileged misuse to social engineering and cloud exploitation—remain a critical yet underexplored cybersecurity risk, and their findings underscore the need for governance frameworks in digital twin-enabled BESSs to combine advanced technical safeguards with predictive, human-centric, and cross-disciplinary approaches.

Otoom [42] further highlighted that digital twins within cyber–physical systems are exposed to a broad range of vulnerabilities, including data breaches, unauthorized access, DDoS attacks, malware infiltration, and insider sabotage, due to their reliance on IoT devices, sensors, and interconnected networks. The study stressed that structured risk auditing and management approaches are essential to safeguard data integrity, ensure system reliability, and maintain the trustworthiness of digital twin implementations across critical sectors—an insight directly relevant to securing digital twin-enabled BESSs.

6.1.5. Privacy Concerns

Though not directly a grid risk, we should note that data from digital twins might inadvertently reveal sensitive info (e.g., an EV fleet’s charging patterns could indicate people’s movements). Ensuring compliance with privacy laws (like GDPR) when dealing with granular usage data is part of governance [8].

6.2. Cybersecurity Framework and Best Practices

To counter these threats, our framework prescribes a comprehensive security approach, aligning with industry best practices and evolving regulations.

6.2.1. Secure Architecture by Design

Right from the design phase, employ principles of defense in depth. This means layering security controls at every level of the digital twin architecture. For instance, sensor data should be encrypted at the source (devices using secure communication modules) and remain encrypted in transit and at rest [8]. Authentication and authorization must be enforced for any system or user accessing the twin—using strong methods (certificates, multi-factor authentication, etc.). The architecture should isolate critical functions. A compromise of the user dashboard, for instance, should not give direct access to control commands. Techniques like network segmentation (separating the BESS control network from broader IT networks) and the principle of least privilege (each component only has the minimum access rights necessary) should be standard.

6.2.2. Standards Compliance (IEC 62443, NERC CIP, and NIS2)

Adhering to recognized cybersecurity standards provides a structured way to manage risks. IEC 62443 offers guidance on securing industrial control systems. Its frameworks can be applied to BESS control and monitoring. It covers aspects like secure product development (for the vendors building twin systems), identity and access management, and continuous monitoring. In critical grid contexts, utilities and operators might already follow NERC CIP (in North America) or ISO 27001 for information security. The digital twin environment should be brought under these compliance regimes.

However, it is important to note that certain risks unique to digital twin environments may not be fully covered by these standards. For example, bi-directional control loops between the twin and the physical battery system can be exploited if compromised, potentially issuing harmful commands in real time. Similarly, the heavy reliance on cloud-based analytics introduces latency vulnerabilities and multi-tenant risk profiles that go beyond the scope of traditional industrial standards. Additionally, ensuring the integrity of continuously updated models poses challenges distinct from static control systems. These twin-specific risks suggest that, while IEC 62443 and NIS2 provide a strong baseline, complementary guidance tailored to digital twin architectures will be necessary.

In Europe, as mentioned, the NIS2 Directive expands the scope to include more energy sector entities, likely encompassing battery storage operators and possibly major service providers. NIS2 mandates risk management, incident reporting, and minimum measures; our framework would ensure that all digital twin deployments involving grid-connected BESSs meet these requirements. Essentially, a digital twin platform should be audited and certified like any other critical OT system.

6.2.3. Continuous Monitoring and Anomaly Detection

Given the real-time nature of digital twins, they can themselves become tools for cyber defense. If the twin’s model detects a discrepancy between expected and actual behavior that does not align with known degradation or usage patterns, this could indicate a cyber–physical attack (for example, if battery sensors are hacked, the twin might receive data that violates physical laws). Implementing anomaly detection analytics on twin data can complement traditional cyber monitoring. Additionally, all components should produce security logs and alerts (failed login attempts, unusual data flows, etc.), feeding into a security operations center (SOC). In a federated system with many distributed assets, consider establishing shared monitoring services. As suggested in the EU context, smaller players could subscribe to a centralized cybersecurity monitoring center that watches over their twin infrastructure [8]. This helps resource-constrained operators maintain a strong security posture.

6.2.4. Incident Response and Recovery Plans

Operators of digital twin-enabled BESSs should have clear incident response plans that include scenarios like data corruption, loss of twin synchronization, or malicious control commands. This might involve automated fail-safes—e.g., if the twin is compromised or goes offline, the battery should gracefully revert to local, conservative control modes (the BMS default) and perhaps disconnect remote commands until verified. Regular penetration testing and cyber drills (possibly mandated by regulators) will help teams practice recovering from attacks [8]. The U.S. initiative to integrate BESS operators into grid cybersecurity exercise programs is a positive example [23]; these should become routine globally. We recommend that any critical battery installations conduct annual cyber drills that include the digital twin systems.

6.2.5. Coordination and Information Sharing

Cyber threats evolve quickly. Thus, sharing intelligence is vital. A governance framework should incorporate mechanisms for sharing information about vulnerabilities or incidents related to battery digital twins. This could be through industry ISACs (information sharing and analysis centers) or government-supported programs. For instance, if one operator detects a new malware targeting BESS telemetry, an alert can be sent to others. Governments might facilitate a clearinghouse for such threats. As noted in the ONCD plan, providing “intelligence-informed briefings to industry groups about the evolving threat landscape” is part of strengthening defenses [23]. Battery storage, as an emerging field, would benefit from inclusion in such briefings.

6.2.6. Liability and Compliance Clarity

Part of governance is clarifying roles. Regulations should define who is responsible if a cyber incident in a digital twin platform causes grid issues—is it the asset owner, the platform provider, or both? Clear assignment of responsibility drives better behavior (since that party will take precautions to avoid penalties). It may also inform insurance markets about cyber incidents. Compliance frameworks (like NIS2) already push responsibility onto operators and service providers jointly [8]. We foresee the need for contractual clarity: e.g., a cloud digital twin provider might have to meet certain cyber standards and bear liability for breaches on their side, whereas asset owners must secure on-site devices.

6.3. Resilience: Beyond Defense

While cybersecurity often emphasizes keeping bad actors out, resilience accepts that some breaches or failures will happen and focuses on limiting damage and speeding recovery. For digital twin-enabled systems, resilience strategies include:

• Redundancy: Maintain redundant communication paths and failovers. If the primary cloud connection fails, perhaps a local edge twin can take over critical monitoring temporarily. If one model or data source becomes unreliable, have backups (e.g., a simpler battery model that can run in degraded mode);
• Graceful degradation: Ensure that the loss of the digital twin does not abruptly stop the battery from operating safely. The system should detect the loss of twin input and switch to a safe default mode. The idea is to avoid single points of failure where the twin is so integrated that its absence causes a crisis;
• Secure boot and update: All devices (sensors, controllers) should have secure boot (to prevent firmware tampering) and secure, authenticated update mechanisms. This mitigates the risk of malware persistence;
• Cyber recovery drills: Just as power systems conduct blackstart drills, conduct cyber-recovery drills—e.g., simulate a scenario where the central twin platform is hit by ransomware; practice shifting operations to local control and restoring from backups.

The ultimate vision is that strong cybersecurity and resilience practices are uniformly adopted, transforming what could be a fragmented, unevenly protected landscape into a “coordinated and secure digital infrastructure” for the energy sector [8]. In Europe, there are discussions about establishing an EU-level cybersecurity coordination center for digital twin infrastructure [8], which indicates the seriousness of purpose. Globally, similar coordination may be pursued via the IEEE or IEC committees linking with cybersecurity experts.

By making cybersecurity a pillar, we ensure that as digital twins become ubiquitous in battery storage and that they do not become the Achilles’ heel of the power system. Instead, they should be a strength—even aiding in security through advanced monitoring. Our framework’s third pillar thus wraps around the first two: whatever standards and market structures we build, they must be embedded in a secure operational envelope. Only then can stakeholders trust and rely on the digital twin systems enough to let them inform real operational decisions on a large scale.

7. Integrating the Pillars: A Holistic Governance Framework: Align Standards, Incentives, and Security to Scale Digital Twin Battery Systems with Confidence and Impact

Having detailed the three core pillars—standards, market/regulatory incentives, and cybersecurity—it is crucial to understand that these are interdependent and mutually reinforcing components of a single governance framework. True success lies in aligning them, such that progress in one area supports and accelerates progress in the others. We propose an integrative approach where policymakers, industry, and international bodies coordinate actions across all three pillars in parallel. Figure 7 shows a holistic governance framework for digital twin battery systems, structured around six key characteristics—definition, synergy, incentivization, global cooperation, monitoring, and adaptive governance—across three governance pillars: standards, market incentives, and cybersecurity. The framework emphasizes the importance of harmonized rules, market-driven alignment, and robust cybersecurity practices to ensure effective, interoperable, and secure digital twin implementation.

7.1. Alignment and Synergies

Standards ↔ market incentives: Standards make it easier to implement incentive policies effectively. For example, if a regulator wants to reward batteries for maintaining a high state of health, there needs to be a standardized way to measure and report SoH. Otherwise, verifying compliance would be inconsistent. By adopting common definitions (Pillar 1), regulators can write clear rules for market incentives (Pillar 2). Conversely, market demand can drive standardization: if a grid operator announces it will only contract BESSs that meet a certain data communication standard (to facilitate system integration), vendors quickly coalesce around that requirement. Thus, policy can be a lever to enforce or motivate standards adoption. Harmonized standards across regions also mean that market incentives have a larger effect. An incentive in one country (say, the EU’s data sharing rules) can nudge multinational companies to comply globally, raising the tide for everyone.

Standards ↔ cybersecurity: Security standards and technical standards should go hand in hand. A data interoperability standard must include security provisions (authentication and encryption) to be truly viable. The IEC, ISO, and NIST frameworks we mentioned explicitly embed security into digital twin standards [24]. When everyone uses secure protocols and certifications, the overall system is more robust. Additionally, the sharing of threat information (a practice in cybersecurity) can be facilitated by standard data formats for incident reporting. For instance, a standard scheme for reporting a cyber incident on a BESS could be developed so that learnings can be quickly disseminated (like an industry CERT alert). Meanwhile, the widespread adoption of security standards (like IEC 62443) across all twin systems prevents the scenario of one sub-standard system becoming the weak link. Consistent implementation is key; a patchwork will not work in an interconnected grid.

Market Incentives ↔ cybersecurity: In an ideal alignment, markets and regulations would also incentivize good cybersecurity. For example, regulators might require a cybersecurity certification as a precondition for market participation (ensuring only secure digital twin implementations are used for, say, frequency regulation). Insurance incentives also play a role: maybe an operator gets a break on liability insurance if they follow certain cyber best practices (like active monitoring). We see hints of this approach with proposals that critical infrastructure operators carry cyber insurance or face penalties for non-compliance with security directives. Another angle is that markets could have contingency reserves factoring in cyber risk. If a participant does not meet a cyber resilience level, they must provide higher reserves or backup. This indirectly rewards those who invested in robust security (often those using digital twins will naturally be more digitally savvy and likely to meet high security standards).

Global cooperation: Aligning standards and practices internationally multiplies benefits. Energy systems are increasingly interconnected, and many companies operate across borders. If the EU, US, and Asia–Pacific all endorse similar principles for digital twin governance, it reduces the chance of a weakest link globally. Bodies like the IEA, IEC, and G20 Energy Transitions Working Group can serve as platforms to promote this alignment. For instance, the IEA could facilitate knowledge exchange of what works in different markets and encourage common metrics and definitions, supporting Pillar 1 globally. The IEC and ISO can ensure that cybersecurity guidelines (Pillar 3) are uniformly integrated. International financial institutions might require certain governance standards for funding storage projects, thus exporting best practices.

Although no jurisdiction has yet adopted the full integrated governance framework outlined in Figure 7, several regions demonstrate partial progress. The European Union’s TwinEU program, for example, advances standardization and data-sharing initiatives, while the United States Department of Energy emphasizes cybersecurity readiness and market participation reforms for storage. These examples show that key building blocks exist, but they remain siloed. Markets with advanced regulatory institutions and high penetration of battery storage—such as the EU, U.S., Japan, and Australia—are well-positioned to pilot an integrated governance framework that combines standards, incentives, and cybersecurity. Early adoption in such contexts would provide critical lessons for broader global implementation.

7.2. Framework in Practice: Conceptual Diagram and Elements

To visualize the holistic framework, imagine a three-pillared temple structure, with each pillar representing standards, market incentives, and cybersecurity, all supporting the overarching goal of safe and effective digital twin-enabled battery storage adoption. The base is formed by stakeholder engagement and capacity building, and the roof symbolizes the outcomes (resilient, efficient, and flexible energy storage integration).

The key framework elements include:

• Governance Bodies and Roles: Assign clear roles to entities. For example:

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  Standards organizations (ISO, IEC, IEEE) to develop and update technical standards, with input from industry consortia;

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  Regulators/policymakers to incorporate these standards and security requirements into laws, market rules, and procurement;

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  Industry alliances (battery manufacturers, software firms, and utilities) to create guidelines and possibly self-regulation codes of conduct following the framework;

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  Cybersecurity agencies (governmental, like the CISA in the US and the ENISA in the EU) to provide threat intelligence, response coordination, and support compliance enforcement;

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  Researchers and academia to continue advancing modeling techniques, which might feed into future standards and identify potential issues (e.g., vulnerabilities in model algorithms).

• Monitoring and compliance mechanisms: The framework should include how compliance is monitored. This could involve audits of digital twin systems (perhaps piggybacking on existing power system audits), certification schemes, and periodic reporting. For example, a yearly “digital asset management” audit for a large storage operator might check that they use up-to-date standard models, have cyber protections in place, and appropriately respond to any issues—akin to financial audits;
• Capacity building: Not all stakeholders currently have the expertise to implement this framework. A governance plan must include training and education—for instance, training programs for utility engineers on using digital twin data in operations or workshops for regulators on interpreting digital twin reports. Investment in workforce development (data scientists who also understand batteries, cyber experts in energy, etc.) will pay off in smoother adoption. The T&D Europe position paper specifically cited that fostering technical expertise in conjunction with cybersecurity measures is vital [36];
• Adaptive governance: The framework should be dynamic. Technology will evolve (e.g., AI might revolutionize digital twin modeling; new battery chemistries may require different data). So, governance must adapt—with feedback loops such as periodic reviews of standards and regulations. We might establish a governance council for digital twins in energy, bringing together key players annually to assess progress, incidents, and needed adjustments.

In practice, this is an example scenario tying it all together. Consider a country launching a major grid battery program aiming for reliability. Under this framework, the government first ensures standards exist (or are imported) for BESS digital twins. It then auctions battery projects requiring bidders to include digital twin capabilities meeting those standards and adhering to specified cyber protocols. During operation, the batteries provide regular data to the system operator via a standardized interface. If any battery’s twin detects anomalies, it flags them to both the operator and a central cybersecurity team. Over time, performance data show these batteries have fewer outages and smoother output, validating the approach and encouraging expansion. If a cyber threat emerges (say, an attempted hack on one facility’s twin), it is quickly shared across the network, and all operators heighten defenses, preventing a larger incident. The regulator, seeing success, perhaps tightens requirements or extends them to smaller systems, and updates technical standards as needed (maybe incorporating new ML-based twin techniques). Meanwhile, the utility might negotiate improved insurance or financing terms because the risk is demonstrably lower. This virtuous cycle, as idealistic as it sounds, is what aligning the pillars aims to achieve.

The holistic governance framework for digital twin-enabled battery storage rests on three aligned pillars: (1) standards and interoperability, providing common languages and technical rules; (2) market and regulatory incentives, shaping economic and policy drivers to adopt best practices; and (3) cybersecurity and resilience, protecting the integrity of digital twin systems. These pillars are interconnected, supporting the overall objectives of improved reliability, efficiency, and safe integration of battery storage. Arrows indicate feedback loops: market requirements push standardization; standards embed security; security compliance enables market trust. Short-, medium-, and long-term milestones guide the phased implementation (details in text). Stakeholder roles (industry, regulators, standard bodies, etc.) are coordinated to maintain the structure’s balance [8].

This integrated approach ensures that no aspect is neglected. Often, technology initiatives falter because a gap in one area (say, security) undermines gains in another (performance). By proactively addressing all, the framework aims for sustainable, scalable adoption.

8. Implementation Pathways: From Vision to Reality (Short, Medium, Long Term)—Implement a Phased Roadmap to Mainstream Secure, Interoperable Digital Twins and Extend Battery Lifespan

Finally, we outline a phased implementation pathway to move from the current state to the envisioned future where digital twin-enabled battery storage is mainstream under robust governance. Instead of being tied to specific calendar years (to remain applicable independent of shifting timelines), we categorize actions as short-term, medium-term, and long-term. Clear role allocation among stakeholders is essential for the effective implementation of the roadmap. Regulators and policymakers should take the lead in establishing standards, mandating interoperability, and embedding cybersecurity requirements in market rules. System operators are responsible for integrating digital twin data into grid operations and ensuring compliance with reliability and security obligations. Original equipment manufacturers (OEMs) and software providers must align their platforms with agreed standards, develop secure-by-design architectures, and support interoperability. Industry alliances and consortia can facilitate harmonization, while insurers and investors provide economic signals that reinforce adoption. Clarifying these responsibilities ensures that the roadmap is not only aspirational but also actionable.

Table 1. Governance implementation roadmap for digital twin battery storage.

Timeframe	Standards and Interoperability (Pillar 1)	Market Incentives and Regulation (Pillar 2)	Cybersecurity and Resilience (Pillar 3)
Short-Term (Initiation Phase)	Establish working groups to define core terminology and data standards for battery digital twins (using ISO/IEC 30173:2023 as a guide); Publish reference guidelines (by IEC/IEEE) for integrating digital twin models with BMS data—focus on immediate interoperability in pilot projects; Promote open data-sharing platforms for battery performance data to seed model development (with proper anonymization).	Issue regulatory guidance endorsing digital twin use for large BESS, clarifying that it can be used to meet monitoring/reporting requirements; Launch incentive programs (grants or tax credits) for early adopters who implement digital twins meeting recognized standards; Modify procurement for grid services to include reliability metrics (e.g., bonus for assets that provide digital twin-verified performance data).	Conduct sector-wide cyber risk assessment for BESS with digital connectivity (possibly led by national cyber agencies); Develop baseline cybersecurity guidelines for storage operators (aligned with IEC 62443/NIST) and require immediate measures (firewalls, VPNs, basic encryption on telemetry); Initiate information-sharing cell for battery storage cyber incidents under existing energy-ISACs; run first joint cyber exercise including a digital twin scenario.
Medium-Term (Expansion Phase)	Finalize and adopt formal standards: e.g., ISO/IEC reference architecture for digital twins, data model standards via IEC for BESS assets, and ensure multi-vendor buy-in; Roll out certification schemes for compliance (a “Digital Twin Ready” label for batteries and a “Standard Compliant Digital Twin” label for software platforms); Drive international convergence—organize standardization symposium with global stakeholders to harmonize efforts (prevent regional divergence).	Embed requirements in market rules: e.g., capacity markets mandate health tracking, ancillary markets add performance-premium rules; Regulators set minimum performance standards: storage operators must maintain a certain SoH or face derating—incentivizing use of twins to manage longevity; Implement “use-it-or-lose-it” policies for data: requiring that battery data (per standards) be shared with system operators for planning (with confidentiality), thereby normalizing transparency; Develop business model frameworks and contract templates that incorporate digital twin services (maintenance contracts, warranty extensions), easing transactional barriers.	Enforce advanced cybersecurity: require all critical BESS and their IT/OT systems to comply with standards like NIS2 (in EU) or equivalent, with audits; Establish collaborative security operations: e.g., a dedicated battery–CERT that monitors threats to BESS and digital twin platforms globally, providing rapid advisories; Promote secure-by-design certification for devices and software (ensure new equipment or updates are vetted for cyber resilience); Expand training and workforce—certify professionals in “cyber-secure digital energy management” to staff the needed roles.
Long-Term (Maturity Phase)	Evolve standards to cover new developments (AI-driven twins, integration with other sectors like EVs or grid digital twins)—continuous improvement committees in place; Achieve near-universal interoperability: plug-and-play digital twin components such that switching software or integrating new assets is seamless (akin to internet plug-and-play standards); Global mutual recognition of standards so a battery twin certified in one region is accepted in another, facilitating international projects.	Digital twin usage becomes standard practice: regulators possibly mandate it for all utility-scale storage. Market models fully incorporate real-time digital twin inputs for dispatch, pricing, and reliability assessment; Incentives shift to more nuanced goals: e.g., carbon efficiency (using twins to minimize degradation and waste), with policies rewarding those who extend battery life and recycle (twins could verify remaining life for second-life markets); Periodic review and adaptation of regulations to keep pace with tech—governance body ensures policies don’t become outdated.	Cybersecurity is ingrained: continuous adaptive security with AI monitoring (digital twins themselves help identify anomalies); Sector resilience proven: even under sophisticated cyberattacks or extreme events, digital-twin-equipped storage networks show graceful degradation and quick recovery, due to drills and robust design; A culture of security: all stakeholders, from battery engineers to market traders, are aware of and trained in cyber hygiene for these systems.

summarizes the key actions in each phase across the three pillars.

In reading Table 1, one can trace how the efforts in each column complement each other over time. In the short term, the focus is on laying groundwork: get key standards efforts going, send strong policy signals, and plug glaring cyber holes. The medium term sees formalization and enforcement: standards become official and widespread, incentives are codified in rules, and cybersecurity is regulated and coordinated. In the long term, the framework is in full effect and self-sustaining, with continuous refinement.

A crucial part of implementation is also measuring success and iterating. Key performance indicators might include a reduction in battery failures or fires (safety incidents), as digital twins catch problems early; improved economic metrics like higher average revenue or longer life for storage assets; zero major cyber incidents affecting BESSs, or if any, fast containment; and widespread satisfaction among investors and insurers that risks are well-managed (lowering financing costs for projects, which would be a market vote of confidence in the governance). Additionally, the creation of new services and industries around the data—for example, analytics startups using standardized battery data to offer services to owners—would indicate that the ecosystem is vibrant.

9. Conclusions: Govern Digital Twin Battery Storage to Boost Grid Resilience, Accelerate Clean Energy, and Avoid Fragmented Futures

The transition to a clean and resilient energy future hinges in part on the effective deployment and management of battery energy storage at scale. Digital twins offer a powerful tool to optimize and integrate these storage resources by providing unparalleled visibility and control. Yet, as this paper has argued, utilizing the potential of digital twin-enabled battery storage is not only a technical effort; it requires a comprehensive governance framework that aligns technical standards, market incentives, and cybersecurity measures. We have presented a three-pillar framework addressing each of these dimensions and proposed how they interconnect to create an enabling environment for innovation balanced with reliability and security.

This study advances the literature and practice in three key ways. First, it develops an original governance framework that integrates standards, market and regulatory incentives, and cybersecurity into a holistic model tailored for digital twin-enabled battery storage. Second, it contributes quantitative evidence by demonstrating how digital twin-guided operational strategies can extend usable battery capacity by up to five percent, thereby linking governance measures with measurable technical and economic outcomes. Third, it provides an implementation roadmap categorized into short-, medium-, and long-term actions, ensuring global adaptability across diverse regulatory and market contexts. Collectively, these contributions fill a critical gap by moving beyond descriptive analysis to offer actionable guidance for policymakers, regulators, industry stakeholders, and researchers.

9.1. Key Takeaways and Recommendations

The key takeaways and recommendations are establishing international standards for battery digital twins to ensure interoperability and build trust in twin data; reforming market and regulatory structures so that improved performance and longevity from digital twin use are financially rewarded and operationally integrated; and embedding robust cybersecurity practices from device to cloud to protect these systems as part of critical infrastructure. By categorizing actions into short-, medium-, and long-term timelines, stakeholders can methodically progress towards the end state wherein digital twin technology is a natural, well-governed facet of battery storage operations worldwide.

This framework is globally relevant—whether for an independent power producer operating grid-scale batteries in California, a utility in Europe balancing renewables with distributed storage, or a microgrid project in Asia ensuring reliability for a remote area. In each case, the combination of clear standards, supportive incentives, and strong security can help overcome current barriers. For instance, the framework would assist energy regulators in drafting rules that require data transparency without overburdening operators, guide industry groups in focusing their standardization efforts on the most impactful areas, and reassure policymakers that increasing digitization will not compromise grid security. It also serves the interests of battery OEMs and software providers by outlining a stable landscape where they can innovate and compete on a level playing field defined by common standards and expectations.

We stress that this is an action-oriented agenda. Policymakers should not wait passively for problems to arise but proactively shape the digital twin landscape now—the same way building codes or vehicle safety standards were instituted alongside those technologies. The cost of inaction could be high: fragmented standards could lead to vendor lock-in and higher costs, a lack of market signals could slow adoption and leave value on the table, and insufficient cybersecurity could result in serious incidents that erode public trust in energy storage. Conversely, the benefits of getting this right are substantial. If governance frameworks are adopted, digital twins could become a key player in the energy transition—improving battery project economics (thus accelerating deployment), enhancing grid stability and renewable integration, and ensuring that, as we digitalize critical systems, we actually increase their resilience and intelligence in tandem.

In conclusion, a coordinated governance approach is not just desirable but necessary to realize the full promise of digital twin-enabled battery storage. The technology is ready to boost efficiency, lifetime, and reliability. Now, the governance must ensure that these gains are captured and shared in a secure, standardized, and economically rational manner. The coming together of international standards bodies, forward-looking regulators, industry innovators, and cybersecurity experts—as envisioned in this paper—will mark the difference between isolated successes and a globally scalable solution. We call on the energy community and decision-makers to take up this framework, adapt it to their contexts, and thereby unlock the next level of energy storage innovation safely and effectively. By aligning technical excellence with institutional support, we can empower battery storage to play its critical role in enabling a cleaner, smarter, and more resilient energy future for all.

9.2. Future Research Opportunities

While this study provides an integrated governance framework, further research is required to operationalize and validate it in real-world contexts. Future studies should focus on (i) empirical validation through pilot projects that quantify the cost reductions and life extension benefits from digital twin-guided strategies; (ii) the development of standardized benchmarking protocols to evaluate interoperability and cybersecurity readiness of digital twin platforms; (iii) the exploration of AI-enhanced digital twins that combine machine learning with physics-based models for greater predictive accuracy; and (iv) an assessment of policy implementation pathways in different regional contexts, particularly in emerging markets where institutional capacity varies. These directions will extend the applicability of the proposed framework, ensure adaptability across jurisdictions, and provide measurable evidence for policymakers and industry stakeholders.