Power System Characteristics

Summary for Decision Makers

There are many considerations to make when deciding on how to plan and deploy energy storage systems. Decision makers should understand the key power system characteristics that enable storage solutions (listed in the table below), at which level (end-use, distribution, or transmission) to deploy storage, and how to appropriately consider costs of storage as opposed to other grid solutions.

Power System Characteristics	Potential Role for Energy Storage
Rapid growth in peak electricity demand and ramping requirements	While the shape and duration of peak demand periods will influence its efficacy, energy storage can be evaluated as an alternative to conventional flexibility and peaking power resources such as gas-fired combustion turbines.
Spiking power prices	Periods of high energy production prices can indicate insufficient power system flexibility to meet demand. Energy storage can be utilized to meet demand during high-priced periods with previously stored energy, a function often referred to as “arbitrage.”
Renewable energy curtailment	High levels of VRE curtailment can be caused by an insufficient ability to back down conventional generators or deliver energy during periods of high VRE availability. Energy storage can be charged with this excess energy to meet demand at a later time, reducing curtailment.
Local and/or regional power disruptions	Disruptions to electricity supply can be indicative of technical and/or operational issues that can potentially be alleviated with energy storage. Energy storage devices can be used to maintain reliable power supply during routine system disturbances (i.e., transmission voltage issues and/or generator outages) as well as during extreme weather conditions.
High targets for solar PV deployment	Power sector transformation toward low-carbon and high renewable energy power systems, particularly with high shares of solar PV generation, can necessitate a transition to highly flexible and nimble system operations. Energy storage is one tool in the toolbox for system operators as they manage increasing variable and uncertain electricity supply from solar.

Table: Key System Characteristics Indicating a Potential Role for Energy Storage[1]

Where Can Storage Be Deployed?

Deployment of energy storage technologies is dependent on relative voltage levels. Storage has the potential to provide targeted grid services to components of the power system that are of higher relative voltage levels. For example, storage systems installed at the end-use level can provide services at that level, as well as to distribution and transmission. Storage systems interconnected to distribution networks do not provide services at the end-use level but does at the transmission level. And transmission-connected storage systems provide services at the transmission level.

Storage at the distribution level relies on additional metering and communication infrastructure, permitting, and sufficient incentives to encourage these assets to participate. To understand if energy storage is appropriate solution at different levels of the grid, skip ahead to:

What Are the Costs of Energy Storage?

The multidimensional nature of electric sector technologies makes “apples-to-apples” comparisons between storage and other grid solutions challenging. This is because electricity technologies can provide multiple grid services, in some cases simultaneously. As storage can provide multiple services, a simple cost comparison for a single type of service provision (e.g., the cost of peaking service provision for a battery) may not capture the entire economics of a project.

Key cost metrics for storage projects include installed cost—measured either in cost per power capacity ($/kW) and per storage capacity ($/kWh)—and levelized cost of storage (LCOS) measured in cost per storage capacity ($/kWh).

Installed cost ($/kW or $/kWh): The installed cost is the total per-unit cost of an energy storage system, including all components, power conversion systems, labor, construction, and other “soft” costs. This is most useful for tracking how the cost of specific technologies changes over time or for comparing costs from different manufacturers or vendors. However, installed cost does not provide an apples-to-apples comparison across different storage technologies or between storage and conventional resources like natural gas turbines.
LCOS ($/kWh): LCOS represents the total cost of constructing, operating, and maintaining an energy storage system over its lifetime. Including maintenance costs is important for battery storage technologies that degrade as they are used. LCOS is most useful for comparisons between different energy storage technologies for the same application.

[1] See (Rose, Koebrich, et al. 2020) for a detailed discussion and comprehensive list of system characteristics, polices, and regulations that can help enable energy storage deployment.