Business is betting big on batteries in a way that could streamline the electricity service in your home.

Battery production capacity has grown eightfold during the past eight years, mostly to meet demand for the rapidly expanding electric vehicle market. Companies believe expansion will continue, so they plan to build new manufacturing plants in the United States, Europe and Asia that will increase production to five times the current capacity in the next eight years.

As with other technologies, more production means improved performance and lower prices, says Jan Ahlen, director of energy solutions for the National Rural Electric Cooperative Association.

“Batteries are becoming better, faster and cheaper,” Jan says. “As more and more of these new manufacturing plants get built, there are economies of scale that are bringing down the prices.”

Batteries developed to make electric vehicles run better are being connected to one another to make utility-scale batteries to store energy.

A New Tool for Electric Utilities

The U.S. Department of Energy’s Energy Information Administration reports utility battery storage capacity has quadrupled in the past five years. During the next three years, the EIA predicts utility battery capacity will triple, and could supply enough electricity for 2.5 million homes.

Although that is a small share of the electricity market, the effects of utility battery use can be huge.

Jan calls these batteries “the Swiss Army knife” of the utility industry because they can be used for different applications and reasons.

Timing for the best price. The cost of the electricity to a utility varies throughout the year and even the day as demand for electricity changes depending on things such as the need for heating or air conditioning. If a utility could buy electricity when it is the least expensive and store it in a battery, then draw from the battery when market prices for electricity are highest, it would result in cost savings that could be passed on to the consumer.

Helping renewable energy. One factor preventing greater use of renewable energy is a lack of solar power at night or wind energy in calm weather. Batteries could store electricity during peak production, making renewables more useful.
Construction management. Batteries could defer the need to upgrade or replace existing utility infrastructure, such as substations, allowing a utility to save money on expensive upgrades.

Utility outage management. Microgrids designate high-priority parts of the larger electric grid—such as hospitals—to help a community manage during a power outage. Those areas might have extra wiring or power sources, such as small generators or utility-scale batteries.

Consumers at the Forefront

Government policies drive the use and development of utility-scale batteries. Several states are directing utilities to consider batteries as part of power restoration plans, or to meet renewable energy goals.

For decades, one of the fundamental truths of the electric power industry has been that electricity can’t be stored. Electricity had to be delivered immediately to homes and businesses through a precise network of wires, transformers and other equipment.

Even just a few strategically placed batteries could change that structure.

In addition to creating options for utility operations, it gives consumers more choices.
High-end electric vehicle maker Tesla took one of its vehicle batteries and redesigned it to hang on the wall of a consumer’s living room. Called the Powerwall, Tesla promotes it as backup power in case of an outage, or to store energy from rooftop solar panels for evening use.

“Batteries are opening up many new opportunities for utilities to help provide more affordable and reliable power for their consumers,” Jan says. “The other implication is it’s part of a larger trend of putting the consumer at the forefront now more than ever and giving them more choices.”

Future of Energy Storage

By Maria Kanevsky

Energy storage technology is extremely versatile. It is small enough to fit in your phone or large enough to power your entire home.

Many people are familiar with small-scale batteries for handheld devices, but utility-scale batteries take energy storage to a new level. The ability to store energy helps ensure energy demand meets supply at any given time, making electricity available when you need it.

The most widespread form of energy storage in the U.S. is through pumped hydropower—a form of mechanical energy storage. Pumped hydropower energy storage has been used for several decades, and makes up about 95% of the country’s utility-scale energy storage.

Energy is stored by pumping water uphill from a lower elevation reservoir for storage in an upper water basin. When energy is needed, the water is allowed to flow through an electric turbine to generate energy, the same way it flows through a hydroelectric dam.

This is the cheapest way to store large amounts of energy, but is largely dependent on the surrounding geography and ecosystem.

Batteries are quickly gaining attention as another form of energy storage. In 2018, the power capacity from battery storage systems in the U.S. more than doubled from 2010.

The most common type of battery chemistry is lithium-ion, which has a high-cycle efficiency and fast response time. Ninety percent of large-scale battery system capacity in the U.S. uses lithium-ion chemistry.

Less-common battery types for utility storage include lead-acid batteries, nickel-based batteries and sodium-based batteries. However, each chemistry has varying limitations.

Beyond pumped hydropower and batteries, there are a few other forms of energy storage used at a utility scale: thermal, hydrogen and compressed air.

Energy storage plays a crucial role in incorporating renewable energy into our electric grid. Solar and wind energy are weather-dependent, so when energy demand is low but energy supply is high from the sun or wind, storing the excess energy makes it possible to use it later when electricity demand is higher.

As renewable energy becomes more prevalent, energy storage will help create a more resilient grid.

Although battery prices have decreased steadily the past several years, energy storage can be expensive to attain. Currently, there are 25 gigawatts of electrical energy storage capacity in the U.S. Experts expect capacity to grow.

As technologies improve, equipment costs decrease and more renewable energy is generated, utility-scale energy storage has the potential to continue expanding in the coming decades.