Due to lack of instrumentation to measure what is going on inside Lithium-ion batteries, the industry is operating the batteries very conservatively. As a result, the benefits from using these batteries are below their potential. Our model-based, application-aware, battery management system (BMS) provides computed information about what is going on inside the batteries without additional instrumentation. This information is used by the battery control system that can discharge the batteries to a deeper level, charge and discharge the batteries faster, and make the batteries last longer without compromising safety. We are using technologies developed at University of Washington: 1) Battery research from Chemical Engineering department and 2) building energy management services from Electrical Engineering department. And, we are leveraging technologies being developed for ARPA-E related to self-learning and diagnostics. The objective of Phase 1 is to develop proof of concept that our approach is both technically and commercially better than current solutions. Our goal is to improve the value of batteries by 20% compared to current methods. Most of the work is software development to integrate work done for last several years at UW with funding from federal and state agencies. Our product will be next generation battery management systems. We will sell to system integrators who provide turn-key solutions to the electric power industry. Our solution will enable integrators to reduce the cost of large energy storage solutions. The key reason for this improvement is that we can relax unnecessarily conservative constraints on the batteries and then perform a tradeoff between degradation of the batteries versus the benefits of enhanced performance of the batteries. The need for our solution is driven by a rapidly growing market for large-scale energy storage for renewable (solar and wind) energy applications and accelerated retirement of gas-fired power plants. Hawaii, California, and mid-Atlantic region of the US are early adaptors of grid-scale batteries.