Batteries are important energy storage devices and are used in different applica- tions. The purpose of this thesis is to study behavior and characteristics of batter- ies when used in system-level design process. In addition, the use of hardware-in- loop (HIL) simulation of batteries for power system applications is studied. The thesis also aims to investigate the ability of HIL in alleviating the need for extensive and detailed modeling of battery storage systems and to improve the accuracy of the simulation of systems where they are used. The major problem of using battery models is that they are greatly aff ected by external factors such as temperature and history of the charge/discharge regimes. An HIL scheme eliminates the need for mathematical modeling of batteries by interfacing them directly to the simula- tor, where charging and discharging regimes, state of charge estimation methods and efficiency can be investigated.