Powering Strong Communities
Energy Storage

Beyond batteries: Understanding energy storage technology

Energy storage is more than batteries. While lithium-ion batteries dominate the headlines related to energy storage, the industry is comprised of a variety of mechanical, chemical, and thermal technologies. The concept of energy storage goes back to ancient civilizations keeping places and food cool. Today, building HVAC systems and water heaters use thermal energy storage to increase energy efficiency. Pumped-hydro facilities have been around for more than a century, and account for most of the energy storage capacity in the United States.

Yet, the technology development – and cost reduction – of batteries is what has elevated the discussion of storage at utilities, state regulatory bodies, and the federal government. As the cost of lithium-ion batteries has come down, thanks in part to electric vehicles, the use of this technology has increased. Some researchers project that the market for lithium-ion batteries will reach $3.2 billion by 2022.

In addition to the fundamental service of backup power, energy storage technology has the potential to support microgrids, resource adequacy, infrastructure investment deferrals, asset optimization, renewable energy integration, and other ancillary services.

Across different types of energy storage technologies, capacity, energy density, lifetime, environmental impact, and other factors can vary. Some technologies are better suited for certain services. For example, a lithium-ion battery, with its relatively small size, would be better than pumped hydro to use in a microgrid.

The economics of storage are also complicated, due the differing capital and operations and maintenance costs across technologies. In general, the more value streams you can leverage, the better, but it’s important to remember that not all services and value streams can be “stacked.” As an example, a storage system cannot be on standby 24/7 for backup power to a critical facility and also be available to provide ancillary services like voltage support. State and local regulations and market trends may also limit the type and number of services an energy storage asset can provide. Public power utilities considering adding energy storage should include these regulations and trends when conducting a cost-benefit analysis.

If energy storage is not on your radar, now is the time to take note.

California, Hawaii, and Arizona are leading in energy storage capacity. In 2017, 21 states planned or had energy storage projects of at least 20 MW. States are advancing energy storage by creating grant programs and investigating barriers to storage deployments. Several states have gone as far as setting energy storage targets or mandates.

Regulators have been moving on energy storage, too. At the federal level, the Federal Energy Regulatory Commission is investigating electric storage participation in markets operated by Regional Transmission Organizations and Independent System Operators.

Coast to coast, public power utilities are looking at ways to cost effectively deploy this new technology. Several public power utilities, including Imperial Irrigation District in California, Sterling Municipal Light Department in Massachusetts, and the Village of Minster in Ohio, received national recognition for energy storage projects.

Learn more about the latest trends and technology in energy storage in Understanding Energy Storage: Technology, Costs, and Potential Value. The report provides an overview of storage technologies, services, and economics, and gives examples of what states and public power utilities are doing to develop storage infrastructure. The report was developed as part of our Public Power Forward strategic initiative, which aims to prepare public power utilities for a new era in electricity and address grid modernization, enhanced retail services, distributed energy resources, new business partnerships, and rate design.