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Electric Energy Storage
CLIMATE TECHBOOK
Quick Facts
• Electric energy storage (EES) uses forms of energy such as chemical, kinetic, or potential energy to
store energy that will later be converted to electricity. Such storage can provide three basic services:
supplying peak electricity demand by using electricity stored during periods of lower demand,
balancing electricity supply and demand fluctuations over a period of seconds and minutes, and
deferring expansions of electric grid capacity.
• Global EES capacity is 90 gigawatts (GW), which is only 3 percent of electric power production
capacity due to the high capital cost of EES compared to natural gas power plants which can provide
similar services, and regulatory barriers to entry in the electricity market. Of that global capacity, 22
GW of EES is in the United States (2.5 percent of U.S. power capacity).
• EES can potentially smooth the variability in power flow from renewable generation and store
renewable energy so that renewable generation can be scheduled to provide specific amounts of
power, which can decrease the cost of integrating renewable power with the electricity grid, increase
market penetration of renewable energy, and lead to greenhouse gas emission (GHG) reductions.
Background
Electric energy storage (EES) technology has the potential to facilitate the large-scale deployment of variable
renewable electricity generation, such as wind and solar power, which is an important option for reducing
GHG emissions from the electric power sector. Wind and solar power emit no carbon dioxide (CO2) during
electricity generation but are also variable or intermittent electricity sources. Wind power only produces
electricity when the wind is blowing and solar power only when the sun is shining, thus the output of these
sources varies with wind speeds and sunshine intensity. Since operators of the electricity grid must
constantly match electricity supply and demand, this makes variable renewable resources more challenging
to incorporate into the electricity grid than traditional baseload (e.g. coal and nuclear) and dispatchable (e.g.
natural gas) generation technologies, which can be scheduled to produce power in specific amounts at
specific times. Electric grid operators have several options for managing the variability of electricity supply
introduced by large amounts of renewable generation, one of which is EES.1
EES promises other benefits unrelated to renewable energy, such as improved grid reliability and stability,
deferral of new generation and transmission investments, and other grid benefits.2
Description
EES technologies vary by method of storage, the amount of energy they can store, and how quickly and for
how long they can release stored energy. Some EES technologies are more appropriate for providing short
bursts of electricity for power quality3 applications, such as smoothing the output of variable renewable
technologies from hour to hour (and to a lesser extent within a time scale of seconds and minutes); however,
EES is not currently used specifically to smooth out renewable generation.4 Other EES technologies are
useful for storing and releasing large amounts of electricity over longer time periods (this is referred to as
peak-shaving, load-leveling, or energy arbitrage).5 These EES technologies could be used to store variable
renewable electricity output during periods of low demand and release this stored power during periods of
higher demand. For example, wind farms often generate more power at night when winds speeds are high
but demand for electricity is low; EES could be used to shift this output to periods of high demand.
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The major technology options for EES include the following:
• Pumped Hydro
Pumped hydro storage uses low-cost electricity generated during periods of low demand to pump
water from a lower-level reservoir (e.g., a lake) to a higher-elevation reservoir. During periods of high
electricity demand (and higher prices), the water is released to flow back down to the lower reservoir
while turning turbines to generate electricity, similar to conventional hydropower plants. Pumped
hydro storage is appropriate for load-leveling because it can be constructed at large capacities of
100-1000s of megawatts (MW) and discharged over long periods of time (4 to 10 hours).6
• Compressed Air
Compressed air energy storage (CAES) is a hybrid generation/storage technology in which electricity
is used to inject air at high pressure into underground geologic formations. When demand for
electricity is high, the high pressure air is released from underground and used to help power natural
gas-fired turbines. The pressurized air allows the turbines to generate electricity using significantly
less natural gas. CAES is also appropriate for load-leveling because it can be constructed in
capacities of a few hundred MW and can be discharged over long (4-24 hours) periods of time.7
• Rechargeable Batteries
Several different types of large-scale rechargeable batteries can be used for EES including sodium
sulfur (NaS), lithium ion, and flow batteries. Batteries could be used for both power quality and load-
leveling applications. In addition, if plug-in hybrid electric vehicles (PHEVs) become widespread, their
onboard batteries could be used for EES, by providing some of the supporting or “ancillary” services8
in the electricity market such as providing capacity, spinning reserve9, or regulation10 services, or in
some cases, by providing load-leveling or energy arbitrage services by recharging when demand is
low to provide electricity during peak demand.
• Thermal Energy Storage
There are two very different types of thermal energy storage (TES): TES applicable to solar thermal
power plants and end-use TES. TES for solar thermal power plants consists of a synthetic oil or
molten salt that stores solar energy in the form of heat collected by solar thermal power plants to
enable smooth power output during daytime cloudy periods and to extend power production for 1-10
hours past sunset.11 End-use TES stores electricity from off-peak periods through the use of hot or
cold storage in underground aquifers, water or ice tanks, or other storage materials and uses this
stored energy to reduce the electricity consumption of building heating or air conditioning systems
during times of peak demand.12
• Hydrogen
Hydrogen storage could be used for load-leveling or power quality applications.13 Hydrogen storage
involves using electricity to split water into hydrogen and oxygen through a process called
electrolysis. When electricity is needed the hydrogen can be used to generate electricity via a
hydrogen-powered combustion engine or a fuel cell.
• Flywheels
Flywheels can be used for power quality applications since they can charge and discharge quickly
and frequently. In a flywheel, energy is stored by using electricity to accelerate a rotating disc. To
retrieve stored energy from the flywheel, the process is reversed with the motor acting as a generator
powered by the braking of the rotating disc.
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• Ultracapacitors
Ultracapacitors are electrical devices that consist of two oppositely charged metal plates separated
by an insulator. The ultracapacitor stores energy by increasing the electric charge accumulation on
the metal plates and discharges energy when the electric charges are released by the metal plates.
Ultracapacitors could be used to improve power quality because they can rapidly provide short bursts
of energy (in under a second) and store energy for a few minutes.14
• Superconducting Magnetic Energy Storage (SMES)
Superconducting magnetic energy storage (SMES) consists of a coil with many windings of
superconducting wire that stores and releases energy with increases or decreases in the current
flowing through the wire. Although the SMES device itself is highly efficient and has no moving parts,
it must be refrigerated to maintain the superconducting properties of the wire materials, and thus
incurs energy and maintenance costs.15 SMES are used to improve power quality because they
provide short bursts of energy (in less than a second).
Environmental Benefit / Emission Reduction Potential
While EES is not needed with current levels of renewable generation nor with renewable generation levels
projected in the near term, greater use of EES can potentially enable very large penetration of variable
renewable generation in the longer term by lowering the cost of connecting these resources with the
transmission grid and of managing the increased variability of generation.16 For example, a recent modeling
analysis conducted by the National Renewable Energy Laboratory (NREL) examined the effect of EES on wind
power.17 In a “business-as-usual” case, NREL’s model projected that building about 30 GW of EES could
allow for the installation of an additional 50 GW of wind generation capacity by 2050 (a 17 percent increase
compared to a scenario with no EES). NREL also modeled a scenario that required 20 percent of electricity to
come from wind power by 2030. In this case, NREL found that investments in EES (in the form of CAES)
became economic once wind penetration reached 15 percent of generation and that EES would lower the
cost of electricity in the case of high wind penetration by 3 percent (about $3/MWh) in 2050.18
EES enables GHG emission reductions by two main mechanisms:
• EES can be used instead of natural gas generators to smooth out the variable output of renewable
resources such as wind or solar power from hour to hour, and allow these resources to be scheduled
according to daily fluctuations of electric demand. For example, the use of CAES to smooth wind
power generation would result in a 56 percent reduction in CO2 emissions per kilowatt-hour of
electricity, compared to smoothing variable wind power with generation from a gas turbine, and
would enable a greater penetration of wind power.19
• EES charged with electricity from low-carbon sources can be used to displace fossil fuel generation
to provide regulation services by smoothing out the fluctuations between supply and demand over a
period of less than 15 minutes. This use of EES could reduce the amount of fossil fuels burned by
generators, leading to GHG and conventional emission reductions.
However, EES can also increase GHG emissions if recharged with cheap electricity from high-carbon
baseload coal power plants to displace more expensive peaking power from lower-carbon natural gas
generators. The GHG emission reduction potential from EES depends on its use with renewable or low-
carbon (i.e. nuclear or coal with carbon capture and storage (CCS)) resources.
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Cost
The up-front capital costs of EES vary by technology. Total capital costs per unit of power capacity for most
EES technologies are high compared to a $800-1100/kW natural gas power plant,20varying from $300-
$450/kW for SMES and ultracapacitors, $600-$1800/kW for CAES, $1500-$3000/kW for batteries,
$2000/kW or more for hydrogen and fuel cells,21 $2500-$4000/kW for pumped hydro, and $3700-
$4300/kW for flywheels. 22 These costs are highly uncertain and complicated by the fact that the cheaper
technologies, such as SMES, ultracapacitors, and some batteries, are only available with small (a few
kilowatt to MW) power capacities. Integrating many small units of these cheaper storage technologies into a
100+ MW-scale utility application would lead to additional cost and complexity.
The cost premium for stored electricity,23 which depends on the lifetime of the EES technology and its
useable energy storage capacity, are not well understood for most EES technologies. One study calculated a
cost premium of $0.05-0.12/kWh for pumped hydro storage, $0.07-0.86/kWh for batteries, and $0.07-
0.64/kWh for flywheels.24 EES technologies at the low cost ranges seem promising in a few applications
when competing against average U.S. peak electricity prices of $0.18/kWh.25
TES for solar thermal power plant and end-use applications are also commercially promising. A solar
thermal power plant with TES is projected to have a lower levelized cost of electricity26 compared to a solar
thermal power plant without storage.27,28 The Electric Power Research Institute (EPRI) has also found that
the use of end-use TES systems can save between 2-7 percent of annual heating/cooling energy costs, if
well-designed.29
Current Status of Electric Energy Storage
The current use of EES technologies is limited compared to the rates of storage in other energy markets
such as the natural gas or petroleum markets. EES capacity, most of which is pumped hydro, is only 2.5
percent of U.S. electric power capacity.30 However, demonstration projects of various EES technologies are
underway in the U.S. and internationally.
• Pumped Hydro
The majority of EES in operation today consists of pumped hydro facilities. The U.S. has 38 pumped
hydro facilities in operation that provide up to 22 GW of power, including 9 large-scale
facilities.31,32,33 Japan has 12 large-scale pumped hydro facilities in use.34 The potential use of this
technology is limited by the availability of suitable geographic locations for pumped hydro facilities
near demand centers or generation.
• Compressed Air Energy Storage (CAES)
Two CAES facilities are in operation today: a 290 MW facility in Huntorf, Germany, which is used to
level variable power from wind turbines, and a 110 MW facility in McIntosh, Alabama, which is used
to provide a variety of power quality functions.35 Some studies forecast that CAES will provide the
bulk of EES services by 2050 because of its lower capital and operating costs.36
• Batteries
Thus far, sodium sulfide (NaS) batteries have been used by utilities worldwide in 196 large-scale
demonstration projects with a total capacity of 270 MW, of which 70 MW are in Japan.37,38 Lithium
ion and flow batteries are relatively early-stage technologies which require research to lower capital
costs, improve cycle life, and improve environmental and safety protocols.39
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• Thermal Energy Storage (TES)
The only commercial demonstration of TES integrated with a solar thermal power plant currently in
operation is AndaSol One in Spain, which uses synthetic oil as the storage medium. Research is
underway to develop molten salts as a potentially more efficient medium for TES. End-use TES is
most cost-effective in regions with mild temperatures and relatively low humidity.40 Demonstrations
of end-use TES technologies have occurred in the United States, United Kingdom, Germany, and
Scandinavia. For example, about 8 percent of residential water heaters in the United Kingdom use a
specific TES material that is heated at night in order to heat water throughout the day and reduce
peak electricity consumption.41
• Hydrogen
There are some demonstrations of EES using hydrogen and fuel cells for utility applications.
However, hydrogen storage requires significant cost reductions prior to large-scale deployment since
electrolysis is about 70-85 percent efficient while fuel cells are about 60 percent efficient, resulting
in at most 42-51 percent efficiency to provide electricity to the grid, which is much lower than the 70-
95 percent efficiencies of other EES technologies.42,43
• Flywheels
Several installations of flywheels to provide power quality services have taken place across the
United States. Flywheels are favored because of their high cycle life44 of 100,000 to 2,000,000
cycles45 and fast charging and discharging times of a few seconds to 15 minutes.46 More research
needs to be conducted to improve the energy densities47 of this storage technology.
• Ultracapacitors
In 2003, the EPRI Power Electronics Application Center conducted a successful demonstration of a
large 100 kW uninterruptible power supply (UPS) using ultracapacitors. However, experts argue that
before further tests of this technology occur, more fundamental breakthroughs to lower costs and
improve energy densities are required.48 ,49
• Superconducting Magnetic Energy Storage (SMES)
Several MW-capacity SMES demonstration projects are in operation around the United States and
the world to provide power quality services, especially at manufacturing plants requiring ultra-reliable
electricity such as microchip fabrication facilities.50 SMES requires further research to lower capital
costs and improve energy densities.
Obstacles to Further Development or Deployment to Electric Energy Storage
• High Capital Costs
The capital costs of current EES technologies are high compared to natural gas generators that
provide similar services.
• Need for Large-Scale Demonstration Projects
EES technologies such as CAES require a few large-scale demonstration projects before utility
managers will have the confidence to invest in these technologies. Although there is one operating
CAES facility in the United States, subsequent projects have faced delays and cancellations.51
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• Transmission Planning Processes
Transmission planning only takes into account the location of demand centers and generation
facilities. As a result, geographically remote EES facilities such as pumped hydro or CAES have
limited access to the transmission grid.52
• Regulatory Barriers
Federal and state regulations treat EES as a type of electric generation technology rather than as an
investment in transmission capacity. Thus transmission and distribution companies are barred from
owning EES.53 In addition, most renewable portfolio standards or government investment or
production incentives are written for renewable generation only and exclude EES, despite the fact
that EES can enable higher penetration of renewable energy.54, 55
• Conservative Industry Culture With Respect to Technology Risks
Regulated utilities are risk averse and reluctant to invest in new technologies, such as EES, due to
the capital-intensive nature of electric generation and the lack of competition in the market.
Deregulation of the electricity industry in parts of the U.S. created a competitive market for
generation, but generator owners are unsure whether they will be able to recover their capital costs
and are also reluctant to invest in new technologies. In general, the energy industry invests a tiny
fraction of profits in research and development compared to other industries, which limits the pace
of improvements in technologies such as EES.56
• Incomplete Electricity Markets
Most regions of the U.S. have not yet fully developed markets and transparent prices for all the types
of ancillary services that EES (and generation) technologies provide besides providing electricity,
such as regulation, spinning reserve, load-following,57 and other services.
Policy Options to Help Promote Electric Energy Storage
• Carbon Price
A price on carbon, such as that which would exist under a greenhouse gas cap-and-trade program
(see Climate Change 101: Cap and Trade), would raise the cost of electricity produced from fossil
fuels relative to the cost of electricity from variable renewable sources, such as wind and solar
power, and from low carbon sources, such as nuclear and coal power with CCS. This would, in turn,
increase the value of the services provided by EES in situations where EES could store relatively
inexpensive low-carbon electricity to displace carbon-intensive power.