Energy storage technology for smart grids

Energy storage technology holds the promise to provide many benefits across the energy delivery value chain — from generation to transmission and distribution (T&D) to end-users. This technology is considered a key component for integration of high levels of renewable energy penetration and as an essential tool for smart, future electricity grids. It has additional benefits, such as, reducing emissions, serving as an alternative to a traditional generation plant, or acting as a tool for demand response, can be captured with the deployment of storage technologies.

Newer energy storage technologies now in the early market adoption stages, such as lithium-ion batteries, flow batteries, flywheels, and sodium-sulfur battery (NaS) systems, offer improved operational flexibility, improved charge/discharge cycle life, and in some cases longer duration or fast response capabilities.  

Suitability for applications

The term energy storage refers to a number of different types of storage technologies, including those whose primary methods are electrochemical, mechanical, or thermal. Within these technology types, several flavors of storage products exist today or are under development. The different types of products and technologies carry with them performance characteristics and costs that make them more or less suitable for given applications. For example, some applications may emphasize fast response over duration, while others require longer durations.

No technology fits all applications; which storage device is best for a given application depends on its technical capabilities as well as the financial viability of the product, based on product costs and application revenues.

Efficiency and life cycle

Two additional factors that can affect the lifetime costs of an energy storage device, which are also used commonly to describe storage features, are efficiency and cycle life. Cycle life refers to the number of charge and discharge cycles that a storage device can provide before performance decreases so as to make it no longer capable of suitably performing the functions it needs to in an application.

Energy storage has the ability to serve multiple grid services. As the name implies, grid storage is connected at various locations along the electric grid system—ranging from distributed energy storage at the community scale on the order of kilowatts (KW) in capacity, to large-scale battery energy storage on the order of 1–2 MWs often aggregated up to 50 MW in size, and to bulk grid storage on the order of tens of MWs.

Relevant initiatives in energy storage

A number of policy initiatives are underway that will impact the energy storage market in the U.S. — some directly and some indirectly. A notable initiative that has had a strong impact in the past year, and whose efforts will likely continue to make an impact in coming years, is the provision of matching funds by the U.S. Department of Energy (DOE) to support energy storage projects.

According to a 2011 report by the Electricity Advisory Committee on energy storage activities in the U.S., the funds provided by the federal government totaled almost $185 million and supported projects valued roughly at $772 million in total.  Associated with these projects was approximately 537 MW of storage capacity, including storage for ancillary services (20 MW), distributed storage (7.5 MW), CAES (450 MW), and storage associated with renewable power (57 MW).

Surge of private investment

In addition to the injection of public funding for demonstration projects, the U.S. storage market has also witnessed a surge of private investment.  According to a recent survey by Ernst & Young, energy storage was the largest segment for cleantech investment in the third quarter of 2011, increasing by 1,932 percent over the same period last year.  Overall, the energy storage segment raised $865.2 million up through the third quarter of 2011, with $421 million raised during the third quarter.  

Likely impact of policy initiatives

Several recent national and regional policy initiatives are also likely to impact the U.S. energy storage market in the near- to mid-term. The U.S. Storage Act of 2011 represents a push by some members of Congress to create tax incentives for energy storage investments. Various versions of a tax incentive have been discussed, and it is feasible that future efforts could ultimately turn one of these versions into law, affecting all storage applications and potentially accelerating the market by defraying costs.  

Currently, the ancillary services markets in five of the U.S. ISOs/RTOs are accessible to energy storage: PJM Interconnection, New York ISO, ISO-New England, Midwest ISO and CAISO. ERCOT is also considering new rules for energy storage participation in the ancillary services markets. New rules by the Electric Reliability Council of Texas (ERCOT) on storage’s ability to provide ancillary services will potentially open the market further in this area.  

Finally, renewable portfolio standards are a strong driver for the renewable energy market. This, in turn, will affect the markets for ancillary services and renewable integration applications of energy storage.