The report pulls together research from several organizations on the various benefits the technology could provide and concludes that batteries at the end of the power system — that is, in the homes and businesses that consume the power — provide the greatest benefit to all parties involved.
But that’s exactly where the technology is most scarce, according to report co-author Jesse Morris.
“Most storage to date is distribution-connected and transmission-connected … now that is changing with new markets opening up,” he said.
The institute identified 13 possible benefits of storing power in batteries, some of which solve big problems in the grid. It could help to avoid blackouts and help the grid come online after a blackout. Extra storage would also create frequency regulation, which allows power companies to smooth out unexpected spikes and dips in electricity usage, and would act as “black start” assets to help get larger power stations back online after an outage.
“Big power plants, hydroplants, natural gas plants, coal plants, things like that, they have a lot of moving parts," said Jesse Morris, a co-author of the report. "And when the power goes down, they don’t have electricity to get those parts moving.”
They would also help cut down electricity demand during peak hours of the day, which is when increased pricing kicks in. The report offered a case study of a large San Francisco hotel, which would be forced to buy high-priced power from 9 a.m. to 10 a.m. and then again from 7 p.m. to 11 p.m. on a given day. If the hotel had a battery that charged for six hours a day and discharged for five, it could avoid ever exceeding the threshold at which peak pricing kicks in.
It would also allow for more efficient use of solar power — rather than selling back unused energy to power companies, residential customers could store the power at their homes and use it later. That could also come in handy in case of a blackout.
“Especially if [a battery is] paired with rooftop solar … you could then ride through a power outage,” Morris said.
Then there’s the cost savings achieved by avoiding unnecessary infrastructure investments. By setting up batteries in a grid, utility companies wouldn’t need to make as many costly upgrades to power stations. That’s the case in New York City, where the utility Consolidated Edison proposed last year to invest in home batteries instead of upgrading two of its power substations.
The substation upgrades would cost $1 billion. The alternative plan, which involved some upgrades as well as the battery installments, would cost half that amount.
It would also reduce the need for the creation of new electricity generation. Because batteries would reduce spikes in energy demand, a prevalence of home battery storage capacity would reduce the need to meet spiking demand and could therefore avoid the creation of natural gas-fired plants that exist to meet peak demand.
The technology still faces several regulatory hurdles that could be removed to encourage investment in batteries, according to the report. With prevalent rules, utilities aren’t allowed to use a fleet of in-home batteries to help companies avoid making unnecessary upgrades and collecting money for it — removing part of the financial incentive for those companies to pay for batteries. Regional transmission organizations, which move electricity over large distances, are prohibited from engaging in “energy arbitrage” — buying energy during low-usage hours, storing it in batteries and then selling it during peak demand hours at higher prices.
Still, some parts of the country are beginning to move forward. Several companies in Silicon Valley, including the electric car maker Tesla Motors, have invested in the production of batteries for both residential and business customers. Those lithium ion batteries are strikingly similar to the ones that go into the company’s cars, which means that factories churning them out are able to achieve economies of scale and bring down the price of batteries for consumers who might not be willing to buy them at higher costs.
“Lithium ion is getting a massive assist on that trajectory because of electric vehicles,” Morris said.
The move comes as California ticks toward a 2020 deadline set through Assembly Bill 2514 for investor-owned utilities like Pacific Gas & Electric and Southern California Edison to purchase 1.325 gigawatts of energy storage capacity. California has also opened up competition in the wholesale energy market.
“In California you now have regulatory proceedings going on that allow batteries like the ones modeled in our paper to be aggregated together and then bid into the wholesale electricity market,” Morris said. “That’s an … existing market that now has expanded access to customers.”
A project in Boothbay, Maine, promises to install batteries that will handle the area's rising energy demand on hot days. And Hawaii has passed legislation calling for all its electricity to come from renewable sources by 2045, a goal which means increased value for batteries that can help smooth out power supply when resources like the sun and wind aren’t available.
