Grid Energy Storage – Why It Matters

A Brief Analysis of Grid Storage’s Development and Benefits

Author: Velocity Suite Summer Intern

As the US electric grid continues its transition from conventional energy sources to more sustainable, yet intermittent options, there will be an increasing need to provide a method for balancing and distributing power from these intermittent sources reliably. One method of doing this is grid energy storage. Grid energy storage is and will be an important component of our transition to alternative fuel sources, and its various benefits can be felt throughout the nation’s electric grid.

Although the need for grid energy storage systems has become more apparent in recent years, grid energy storage is not a new concept. In fact, as we can see in this chart, much of the nation’s storage capacity has actually been online for quite some time.

GUC Storage by Online Date
Source: Velocity Suite Generating Unit Capacity Dataset

In addition to the age of the nation’s storage capacity, grid energy storage is overwhelmingly provided by pumped storage hydroelectricity. According to EIA 860 Nameplate Capacity data, over 98% of storage capacity comes from pumped storage.

However, in recent years and months, there has been a shift from pumped storage development to new, alternative methods of storing energy. Some of these, such as battery, flywheel, and compressed air energy storage, have begun to reach commercial viability. Battery storage development has ramped up in the last few years, and is expected to peak this year with 19 units due to come online. There have also been a few new compressed air facilities coming online, as well as a number of projects using other technologies. This development is represented in the following chart of grid energy storage projects from 2011-2020.

unit count by online date 2011-2020
Source: Velocity Suite Generating Unit Capacity Dataset

Whatever the storage method, more information on any new storage project developments can be viewed by going to the New Entrants Analyst in the Velocity Suite.

Grid energy storage has a number of benefits that make it economically viable. Storage can help electricity providers meet peak demand by drawing power from the grid during off peak times and sending power back to the grid during times of high demand. This can help make renewable resources more viable. Due to the intermittent nature of many of our alternative fuel sources (such as wind or solar), power may not always be produced when demand is high. This can be seen by looking at hourly wind generation in PJM compared to hourly load. In this graph, wind generation in PJM does not correlate to load at all. In fact, the wind generation often peaked during times of minimal load or was lowest during times of high load.

PJM Wind vs Load
Source: Velocity Suite Hourly Generation by Fuel Type Dataset

Grid energy storage systems can store this power when it is produced and save it for when it is needed. This capability is essential if intermittent resources are to be used for baseload power. With the addition of grid energy storage, balancing authorities are able to better utilize the production of intermittent energy sources – this is one of the critical strengths of grid energy storage.

Grid energy storage systems can also be profitable. Using LMP prices from the Bath County Pumped Storage Hydro Plant as an example, this effect can be visualized. When prices are low, the facility can purchase power to pump water into the upper reservoir, thereby storing energy. When prices are high, the facility can then switch to generation mode and sell the energy back to the grid at a much higher price. Even with loss from the energy transfer process, operators of storage facilities like this stand to make a healthy profit.

Bath County LMP Analyst
Source: Velocity Suite LMP Analyst

Grid energy storage systems can also lessen the need for more expensive transmission system upgrades because they enable use of nearby intermittent resources instead of having to import power from faraway places when the wind isn’t blowing or the sun isn’t shining.

There are also a few disadvantages associated with grid energy storage. The first is this – grid energy storage systems are often inefficient. In many cases, operators may lose at least 20% of the energy they expend on the storage process. Again using Bath County as an example, this is reflected in the chart below.

Bath County Loss
Source: Velocity Suite Generating Plant Statistics Dataset

Additionally, grid energy storage can be expensive. A quick look at the New Entrants Analyst in Velocity Suite shows that the construction cost per megawatt of pumped storage hydroelectric projects (of any status) averages almost 30% greater than natural gas combined cycle units. Despite these pitfalls, grid energy storage will likely continue to be an important component of our electric infrastructure.

The Velocity Suite can be used to analyze more information related to grid energy storage. For more information or questions about how to use these tools and analysts in Velocity Suite, feel free to email us at Customer Support.


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