Why is energy storage important?

Energy storage fundamentally improves the way we generate, deliver, and consume electricity.  Energy storage helps during emergencies like power outages from storms, equipment failures, accidents or even terrorist attacks. But the game-changing nature of energy storage is its ability to balance power supply and demand instantaneously – within milliseconds – which makes power networks more resilient, efficient, and cleaner than ever before.  

How big is the energy storage market?

Energy storage systems make up approximately 2% of U.S. generation capacity.  That percentage is growing significantly, especially with the advent of more renewable energy. Pumped hydroelectric power has played an important part of our electricity grid since the 1930s. Yet today, electricity from wind, solar and other ‘intermittent’ sources have created urgent needs for additional energy storage.  

According to Wood Mackenzie Power & Renewables, the US market deployed 310.5 MW in 2018 – a 44% increase over 2017 as costs declined and capabilities continue to improve. They project that annual deployments in 2024 will reach 4.4 GW – and a $4.7 billion market.

Where are energy storage systems operating in the United States? 

Energy storage systems are in operation or under development in nearly every U.S. state.  These projects range from small (like the project that recycles electricity from Philadelphia’s mass transit system) to the very large (such as major reservoirs and pumping facilities in South Carolina and Missouri). Energy storage is at work in a host of new and exciting applications across four main categories: electrical, mechanical, thermal, and chemical. Examples in the electric category include superconducting magnetic energy storage and capacitors. Pumped hydroelectric power, compressed air, and flywheels represent mechanical storage mechanisms. Batteries are the most common type of chemical storage, and ice is the most common form of thermal storage.

The Department of Energy maintains a partial map of more recent projects here.

How is energy storage useful on a grid scale?

Energy storage is needed on an industrial or grid scale for three main reasons. The first is to “balance load” – to shift energy consumption into the future, often by several hours – so that more existing generating capacity is used efficiently. The second reason is to “bridge” power – in other words, to ensure there is no break in service during the seconds-to-minutes required to switch from one power generation source to another. Finally, power quality management – the control of voltage and frequency to avoid damaging sensitive equipment – is an increasing concern that storage can alleviate whenever needed, for a few seconds or less, many times each day. 

Can energy storage technology work with all fuel sources? How?

Yes, energy storage systems are “fuel neutral.” Whether electricity is generated from oil, gas, coal, nuclear, wind, solar, geothermal, or other sources, energy storage captures excess electricity at high efficiencies for optimal use during outages, peak hours, or whenever effective grid management is a challenge.

Why do we need energy storage?

The primary benefits are:

Risk of Power Outages: Today’s electricity grid is increasingly vulnerable to threats from nature, terrorists, and accidents. Millions of American families and businesses are victimized by outages (both sustained and monentary) each year.  Power outages cost as much as $200 billion annually, according to the Department of Energy, while hitting the job-creating commercial and industrial sectors the hardest. 

Saving Consumers Money:  Sixty million Americans in thirteen states plus Washington, DC are saving money because energy storage systems are providing frequency regulation in PJM territory (the power transmission operator in the mid-Atlantic region).  PJM has projected that a 10-20% reduction in its frequency regulation capacity procurement could result in $25 million to $50 million savings to consumers.  Energy storage can also let customers avoid premium pricing that utilities charge during times of peak demand.  That’s like getting a cheap airline flight on Thanksgiving or a rush-hour subway pass at an off-peak price.

Clean Energy Integration and Energy Independence: Energy storage supports the integration of renewable energy generation. Energy storage can also help cut emissions as it takes more of the load off fossil-fuel generation. Peaking generation is one of the most costly and wasteful aspects of the grid, so making existing generation go further and avoiding capital and resource-intensive new facilities would make a significant contribution to our environmental priorities.

Economy and Jobs: In addition to reducing economic losses from major and minor annual outages, experts say that energy storage will be a critical technology in the electricity grids of the future. They also predict that the long term-health of the U.S. economy, and tens of thousands of future U.S. jobs, depend in no small part on the ability of U.S. companies to at least remain competitive, if not to become leaders, in this critical technology.

How will energy storage cut power costs?

Energy storage can lead to cost savings in two primary ways.  The first is by lowering the overall cost of providing electricity.  The second is by allowing customers to avoid premium pricing (or “peak demand”). Industry insiders call this saving money on “both sides of the electric meter.” But broader energy storage deployment can save consumers money in additional ways.   Shorter outages for residents after a storm or an equipment failure can help save not only money but lives.  And fewer outages overall lead to less economic losses.   

Is energy storage technology safe?

Yes. Energy storage has been a part of our electricity grid since the 1930s. In fact, energy storage makes up approximately 2% of US generation capacity, and enjoys a safety record that is similar or better than other electricity generation, distribution, or management methods.

Is energy storage clean?

Yes. Energy storage has no direct emissions. It requires no pipelines. Its systems typically require a minimal footprint.  It recycles electricity. But energy storage will also help cut emissions as it takes more of the load off traditional generation or allows it to operate in a more efficient manner.  

What is peak-shaving?  How does energy storage fit in?

During times of peak electricity demand – like when air conditioners ramp up on hot days – many utilities charge customers extra since they have to ramp up expensive additional electricity production to meet the demand. These charges are called “time-of-use” or “peak” prices since they are tied solely to WHEN a customer uses the electricity.  For example, many households today run appliances like dishwashers and laundry machines on six-hour delays or in the middle of the night to avoid these higher electricity prices and save money on their utility bills.

Energy storage works in similar ways, but since energy storage lets customers decide when to buy and when to use the power, a customer is freed from premium charges. Customers naturally purchase the electricity at off-peak prices for use during peaks, which is like getting an airline flight on Thanksgiving or a rush-hour subway pass at an off-peak price. For residential and especially for industrial customers, these savings can be significant.  

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