Requirements and Benefits of Grid Storage

Camilo Cabrera
November 11, 2013

Submitted as coursework for PH240, Stanford University, Fall 2013

The Need

Fig. 1: Cost effective storage can provide many benefits to our national electric grid. (Courtesy of the U.S. Department of Energy)

Our national electric grid operates continuously to provide Americans with power on demand when we plug into the wall. Electricity generation is in constant flux to perfectly meet electricity demand. Without storage, any excess electricity generation is wasted and any deficit between generation and demand results in delayed delivery of power to loads. [1] This means that electricity generation must be sustained by a reliable power supply, coal-fired or natural gas power plants in most cases. This leaves renewables like wind and solar power to small scale operations and out of the realm of contributing to the grid at large. Cost-effective grid energy storage is needed to make the grid more efficient and allow intermittent renewables to substantially contribute to the energy mix for our national grid.

Benefits of Energy Storage

Electric energy time-shift, or arbitrage as its otherwise known, allows the purchasing or generation of energy during low-demand times at low cost and making it available for sale or use at high-demand times avoiding the relatively high cost of energy during those periods. [1] Peak demand usually occurs on weekdays in the early to mid-afternoon with minima in demand occurring in the early morning. With the implementation of energy storage, the storage system would be discharged in the early to mid-afternoon having been charged at a time of day with lower demand. Energy time-shift can allow for producers and consumers to reduce their overall costs for electricity. [2]

Challenges Ahead for Energy Storage

Regulation involves balancing of power demand with power generation on short timescales and in small control areas. That is, regulation is concerned with reconciling momentary differences caused by fluctuations in electricity generation and loads plugged into the grid. Storage is well suited to perform the task of regulation due to most types of storage being able to respond quickly and operate at partial outputs with relatively modest performance losses. [1]

Storage can also function in a reserve capacity to support the grid in the event of a catastrophic failure to the grid. [2] These needs command a much smaller portion of the energy storage market but are necessary to prevent disasters like the blackout that occurred in the northeast portion of the United States and the southeast portion of Canada in 2003.

Load leveling of the power demand on the electric grid also serves the purpose of enabling more optimal operation of electricity generators on the grid. The hardware used to generate electricity stands to benefit from electric energy storage by being operated in regimes where generation is stable and optimal, reducing equipment wear and fuel use. [3]

Cost-Benefit Discussion on Energy Storage

It is important to discuss the cost-benefit situation of energy grid storage to determine its viability on our national electric grid. The value of energy storage for energy-only, reserve-only, and both energy and reserve purposes have been examined by the National Renewable Energy Laboratory (NREL). Energy-only applications involve applications where the an energy storage device is allowed to charge and discharge in response to a given system's requirements. Reserve-only applications refer to use cases when electricity generation is needed in an emergency situation to back-up a given system. [2] Storage value in energy-only scenarios decreases as a function of the storage size of the system. That is, as the capacity of the energy storage device increases, the value of the energy stored by the system decreases. [2] This result is corroborated by a report from the Electric Power Research Institute, which says that smaller energy storage systems are more cost-effective than larger ones. [1] As mentioned before, reserve-only applications constitute a smaller overall portion of the energy storage requirement. In addition, the value of storage devices providing only reserve power is much more subject to volatility of reserve prices and is much harder to predict on a cost-benefit basis. [2] As far as lifetime of energy storage systems is concerned, longer-lasting systems are more cost-effective than systems that require regular maintenance or replacement of parts and materials. [2]

The energy storage space is not without its challenges. The operation of energy storage systems as both generation and load sources complicates its use, its limited duration of energy poses constraints on the systems with which they are used, and limited commercial, technical, and safety knowledge about the deployment of storage are current obstacles for the implementation of storage on a large scale. [2] In the short term, the high cost per kilowatt and energy storage's many competitors, including software solutions to electric grid problems, also impose barriers to entry for players attempting to enter the energy storage space. [4]

Looking Forward

Energy storage has many potential benefits that could be prove valuable to electricity generators including reduced cost of production of energy through arbitrage and reduced maintenance on hardware due to optimization of current electricity generation technology as well as consumers that can benefit from arbitrage when paying for power at a less variable price. [4] Technologies that seem promising for widespread implementation include compressed air energy storage, flywheel technology, advanced lithium ion batteries, advanced lead-acid batteries, and a handful of other novel battery chemistries and battery solutions. [5] Energy storage is a field garnering much attention and has the potential to become an integral part of the way our national electric grid works.

© Camilo Cabrera. The author grants permission to copy, distribute and display this work in unaltered form, with attribution to the author, for noncommercial purposes only. All other rights, including commercial rights, are reserved to the author.


[1] "DOE/EPRI 2013 Electricity Storage in Collaboration with NRECA," Sandia National Laboratories, SAND2013-5131, July 2013.

[2] B. Kaun and S. Chen, "Cost-Effectiveness of Energy Storage in California," Electric Power Research Institute, 3002001162, June 2013.

[3] J. Eyer and G. Corey, "Energy Storage for the Electricity Grid: Benefits and Market Potential Assessment Guide," Sandia National Laboratories, SAND2010-0815, February 2010.

[4] P. Denholm et al., "The Value of Energy Storage for Grid Applications," U.S. National Renewable Energy Laboratory, NREL/TP-6A20-58465, May 2013.

[5] J. Melas-Kyriazi, "Grid-Scale Batteries," Physics 240, Stanford University, Fall 2012.