BESS (Battery Energy Storage System) is an essential element of future power system to improve a stability and frequency response in power system. In addition, through the development of technology and the decline in the price, the use of ESS is gradually increasing. In particular, the recent use of lithium-ion battery has been increasing in power grid. This paper presents the architecture and operation strategy of the battery energy storage system (BESS) demonstration project located in island Buton, Baubau Southeast Sulawesi, Indonesia. This project has a capacity of 4 MW / 8 MWh that uses Lithium-ion batteries (LiB). The BESS uses eight (8) LiBs with an energy capacity of 1-MWh each. Two batteries are connected to one PCS (ES-PCS connection), each with a 1-MW power output capacity. The ES-PCS configuration being controlled by the PMS is connected to the grid thru a step up transformer (380 V / 20 kV). As of this writing, the BESS has two fully functional applications as controlled by the PMS, load leveling, Frequency Regulation and wind power smoothing.