Where does energy storage come from?

Energy storage for electricity generation

An energy storage system (ESS) for electricity generation uses electricity (or some other energy source, such as solar-thermal energy) to charge an energy storage system or device, which is discharged to supply (generate) electricity when needed at desired levels and quality. ESSs provide a variety of services to support electric power grids. In some cases, ESSs may be paired or co-located with other generation resources to improve the economic efficiency of one or both systems.

Types of energy storage systems for electricity generation

The five types of ESSs in commercial use in the United States, in order of total power generation capacity as of the end of 2022 are:

• Pumped-storage hydroelectric
• Batteries (electro-chemical)
• Solar electric with thermal energy storage
• Compressed-air storage
• Flywheels

Other types of ESSs that are in various stages of research, development, and commercialization include capacitors and super-conducting magnetic storage.

Hydrogen, when produced by electrolysis and used to generate electricity, could be considered a form of energy storage for electricity generation. Thermal ice-storage systems use electricity during the night to make ice in a large vessel, which is used for cooling buildings during the day to avoid or reduce purchasing electricity when electricity is usually more expensive.

Electricity generation capacity of energy storage systems

Two basic ratings for ESS electricity generation capacity1 are:

• Power capacity—the maximum instantaneous amount of electric power that can be generated on a continuous basis and is measured in units of watts (kilowatts [kW], megawatts [MW], or gigawatts [GW])
• Energy capacity—the total amount of energy that can be stored in or discharged from the storage system and is measured in units of watthours (kilowatthours [kWh], megawatthours [MWh], or gigawatthours [GWh])

The U.S. Energy Information Administration (EIA) collects and publishes data on two general categories of ESSs based on the size of power generation capacity:

• Utility scale or large scale have at least 1 MW of net generation capacity and are mostly owned by electric utilities or independent power producers to provide grid support services.
• Small scale have less than 1 MW of net generation capacity, and many are owned by electricity end users that use solar photovoltaic systems to charge a battery. EIA publishes data only for small-scale battery ESS.

ESSs are not primary electricity generation sources. They must use electricity supplied by separate electricity generators or from an electric power grid to charge the storage system, which makes ESSs secondary generation sources. ESSs use more electricity for charging than they can provide when discharging and supplying electricity. Because of this difference, EIA publishes data on both gross generation and net generation by ESSs. Gross generation reflects the actual amount of electricity supplied by the storage system. Net generation is gross generation minus electricity used to recharge the storage system and the electricity consumed to operate the energy storage system itself. Net generation from ESSs is reported as negative in EIA data reports to avoid double counting the generation from charging sources for ESSs and the generation from ESSs. The difference between gross and net generation varies widely by type of ESS.

Most of the largest ESSs in the United States use the electric power grid as their charging source. An increasing number of battery ESSs are paired or co-located with a renewable energy facility, which in some cases may be used directly as a charging source. As of December 2022, about 3,612 MW of battery power capacity were located next to or close to solar photovoltaic and wind energy projects.

Uses and benefits of energy storage systems for electricity generation

ESSs are used for many purposes and provide a number of benefits to the electric power industry and electricity consumers. The major uses and benefits of ESSs are:

• Balancing grid supply and demand and improving quality and reliability—Energy storage can help balance electricity supply and demand on many time scales (by the second, minute, or hour). Fast response (ramping) ESSs are well suited to provide ancillary services for electric power grids to help maintain electric grid frequency on a second-to-second basis. Power quality is an important attribute of grid electricity because momentary spikes, surges, sags, or outages can harm electric equipment, appliances, and other devices powered by electricity.
• Peak electricity demand shaving and price arbitrage opportunities—Charging an ESS during periods of lower electricity demand and discharging an ESS and using or selling the electricity during higher demand periods can help to flatten daily load or net load shapes. Shifting some or all of electricity use from peak demand periods to other times of a day can reduce the amount of higher-cost or seldom-used reserve generation capacity, which can result in overall lower wholesale electricity prices. The stored and discharged electricity may be sold at a premium (arbitrage) above the price or cost of the charging electricity or it can be used to avoid using or purchasing higher-cost electricity.
• Storing and smoothing renewable electricity generation—Energy storage can provide greater and more effective use of intermittent solar and wind energy resources. Pairing or co-locating an on-grid ESS with wind and solar energy power plants can allow those power plants to respond to supply requests (dispatch calls) from electric grid operators when direct generation from solar and wind resources is not available or limited. Alternatively, an ESS can help solar and wind power plants avoid reducing or curtailing generation when the availability of those resources exceeds electricity demand or power transmission line capacity or as required by grid operators. ESSs also allow for storing and using renewable energy where there is no access to an electric grid (an off-grid system).
• Deferring electricity infrastructure investments—Localized pockets of increasing electricity demand sometimes require electric utilities to upgrade existing or build new, expensive substations, and power transmission and distribution lines. ESSs at strategic locations on the grid can help utilities to manage growing electricity demand at lower cost than upgrading or expanding electric grid infrastructure.
• Back-up power—An ESS owned by on-grid electricity consumers can provide emergency back-up electricity during grid outages.
• Reducing end-user demand and demand charges—Commercial and industrial electricity consumers can deploy on-site energy storage to reduce their electricity demand and associated demand charges, which are generally based on their highest observed levels of electricity consumption during peak demand periods. An ESS can also be used by participants in utility demand-side management (DSM) programs.
• Integration with microgrids—ESSs are being integrated into microgrids that supply a relatively small geographic area or customer base to provide some or all of the uses and benefits of electricity storage listed above. A microgrid ESS may be isolated from a larger grid, or it may be connected to a larger grid with automatic isolation (disconnect) from the larger grid during grid supply interruptions.

ESSs are designed to supply electricity on varying timescales, which is reflected in the duration of their discharge-generation cycle length, and they can be grouped into two general categories according to their usual duration and main use:

• Short duration—on the scale of minutes and power oriented
• Diurnal or daily duration—on the scale of hours and energy oriented

Simple examples of duration cycles are two systems each with 2 MWh energy capacity, where one (usually) produces 2 MW for short periods of time (seconds to minutes, a short duration system) and the other (usually) produces less than 1 MW consistently for 4 hours (a diurnal duration system). In general, pumped-hydro, compressed-air, and large energy-capacity battery ESSs can supply a consistent level of electricity over extended periods of time (several hours or more) and are used primarily for moderating the extremes of daily and seasonal variations in electricity demand. Many battery storage systems, and flywheels and super capacitors, provide rapid response to electricity demand fluctuations on sub-hourly timescales—from a few minutes down to fractions of a second—to keep grid voltage and frequency characteristics within a narrow range and provide an expected level of power quality.

Energy storage systems for electricity generation operating in the United States

Pumped-storage hydroelectric systems

Pumped-storage hydroelectric (PSH) systems are the oldest and some of the largest (in power and energy capacity) utility-scale ESSs in the United States and most were built in the 1970’s. PSH systems in the United States use electricity from electric power grids to operate hydroelectric turbines that run in reverse to pump water to a storage reservoir. When needed, the water is sent back down through the turbines to generate electricity. PSH systems are generally operated most often during summer months to help meet daily peaks in electricity demand that are often the result of increases in cooling demand by utility customers.

In 2022, the United States had 40 PSH systems operating in 18 states with a combined total nameplate power capacity of about 22,008 MW. (Energy capacity data are not available for these facilities.) The largest PSH is the Bath County facility in Virginia, which has six separate generators, each with 477 MW nameplate power capacity for a combined total of about 2,860 MW of nameplate power capacity that can discharge at full capacity for up to six hours or longer. The smallest and oldest PSH facility is the Rocky River plant in Connecticut, which began operation in 1928 and has two generators each with 3.5 MW of nameplate power capacity and one generator with 24 MW nameplate power capacity. The newest PSH system is the Lake Hodges Hydroelectric Facility in California, which became operational in 2012 and has 42 MW of nameplate power capacity.

Five states—California, Georgia, Michigan, South Carolina, and Virginia—combined, had 61% of the total U.S. PSH nameplate power generation capacity in 2022, and they accounted for about 67% of total gross electricity generation from PSH facilities in 2022.

Battery energy storage systems

As of the end of 2022, the total nameplate power capacity of operational utility-scale battery energy storage systems (BESSs) in the United States was 8,842 MW and the total energy capacity was 11,105 MWh. Most of the BESS power capacity that was operational in 2022 was installed after 2014, and about 4,807 MW was installed in 2022 alone. Power capacity ratings for individual batteries of operating BESSs range from less than 1 MW to the 409 MW Manatee Solar Energy Center in Florida, which began operating in November 2021.

Of the 39 states with utility-scale BESSs in 2022, California, Texas, and Florida had the most installed BESS power and energy capacity. Their combined percentage shares were 83% of total BESS power capacity and 80% of total BESS energy capacity.

Most utility-scale BESSs perform multiple roles, depending on revenue opportunities or grid support requirements. BESSs are usually designed to maximize either their power or energy capacity. In 2021, frequency regulation of electric power supply was the largest reported application of utility-scale BESSs in terms of the share of total battery power capacity.

Pairing or co-locating batteries with renewable energy generators is increasingly common and is expected to continue. In 2011, two BESSs were co-located with renewable energy power plants—one with a solar photovoltaic plant and one with a wind power plant. In 2022, 207 BESS plants were co-located with renewable-energy generators, nearly all of which were co-located with solar photovoltaic plants. Fourteen BESSs were co-located with wind energy projects.

Types of energy storage batteries

BESSs use different types of batteries with unique design and optimal charging and discharging specifications. The majority of U.S. utility-scale BESSs use lithium-ion batteries, which have performance characteristics such as high-cycle efficiency and fast response times favorable for grid-support applications.

Small-scale battery energy storage

EIA’s data collection defines small-scale batteries as having less than 1 MW of power capacity. In 2021, U.S. utilities in 42 states reported 1,094 MW of small-scale battery capacity associated with their customer’s net-metered solar photovoltaic (PV) and non-net metered PV systems. The capacity associated with net-metered systems accounted for about 71% of total small-scale battery capacity.

Solar thermal-electric power systems with energy storage

In 2022, the United States had two concentrating solar thermal-electric power plants, with thermal energy storage components with a combined thermal storage-power capacity of 450 MW. The largest is the Solana Generating Station in Arizona, which has 280 MW of storage power capacity. The Crescent Dunes Solar Energy power plant in Nevada has 125 MW of storage power capacity. Energy capacity data are not available for these facilities.

Compressed-air storage systems

The United States has one operating compressed-air energy storage (CAES) system: the PowerSouth Energy Cooperative facility in Alabama, which has 100 MW power capacity and 100 MWh of energy capacity. The system’s total gross generation was 23,234 MWh in 2021. The facility uses grid power to compress air in a salt cavern. When needed, the pressurized air is released, heated with natural gas, and then expanded through a gas turbine to generate electricity.

Flywheel energy storage systems

In 2022, the United States had four operational flywheel energy storage systems, with a combined total nameplate power capacity of 47 MW and 17 MWh of energy capacity. Two of the systems, one in New York and one in Pennsylvania, each have 20 MW nameplate power capacity and 5 MWh of energy capacity. They report frequency regulation as the primary use for the systems. A flywheel system in Texas has two flywheels, each with 2.5 MW of power capacity and 2.5 MWh of energy capacity that provide emergency backup power to Austin Energy’s operations control center. A flywheel system in Kodiak, Alaska, is part of a microgrid that supplies multiple grid support services and has 2 MW power capacity and 2 MWh of energy capacity.

Outlook for energy storage for electricity generation

As of the end of December 2022, one natural gas CAES project, located in Texas, with about 317 MW nameplate capacity is planned for completion in 2025. All other planned energy storage projects reported to EIA in various stages of development are BESS projects and have a combined total nameplate power capacity additions of 22,255 MW planned for installation in 2023 through 2026. About 13,881 MW of that planned capacity is co-located with solar photovoltaic generators.

The major factors contributing to the growth of BESS capacity additions include:

• Wind and solar electric project capacity additions where BESS can partner with or be located near renewable energy projects
• State policies that encourage renewable electricity generation and BESS
• Local, real-time, capacity-constrained markets that may present economic opportunities for BESSs

Several states have established targets and provide financial incentives for new BESS capacity.

As of December 2022, EIA had not received formal notices for planned new PSH or flywheel energy storage projects. However, as of February 2023, the Federal Energy Regulatory Commission (FERC), which permits and licenses non-federal PSH projects in the United States, reports pending licenses for 2,672 MW of new PSH capacity in California, Massachusetts, and Wyoming. In addition, FERC has issued preliminary permits for 47,960 MW of PSH capacity in 21 states. It could take many years for most of these proposed projects to receive operating licenses from FERC and many may not receive licenses. A FERC license allows (but doesn’t require) construction and operation of a hydroelectric power plant. A preliminary permit simply holds the place in the licensing queue for projects undergoing technical and economic evaluation.

Last updated: August 28, 2023, with data available as of March 2023; data for 2022 are preliminary.

Battery storage, or battery energy storage systems (BESS), are devices that enable energy from renewables, like solar and wind, to be stored and then released when the power is needed most.

Lithium-ion batteries, which are used in mobile phones and electric cars, are currently the dominant storage technology for large scale plants to help electricity grids ensure a reliable supply of renewable energy. We’ve begun deploying this technology with heavier equipment, working with Viridi Parente – a company that makes battery storage systems for industrial, commercial and residential buildings.
 

Why is battery storage important and what are its benefits?

Battery storage technology has a key part to play in ensuring homes and businesses can be powered by green energy, even when the sun isn’t shining or the wind has stopped blowing.

For example, the UK has the largest installed capacity of offshore wind in the world, but the ability to capture this energy and purposefully deploy it can increase the value of this clean energy; by increasing production and potentially reducing costs.

Every day engineers at National Grid and electricity grids worldwide must match supply with demand. Managing these peaks and troughs becomes more challenging when the target is to achieve net zero carbon production. Fossil-fuel fired plants have traditionally been used to manage these peaks and troughs, but battery energy storage facilities can replace a portion of these so-called peaking power generators over time.

The UK government estimates technologies like battery storage systems – supporting the integration of more low-carbon power, heat and transport technologies – could save the UK energy system up to £40 billion ($48 billion) by 2050, ultimately reducing people’s energy bills.

Prescott Hartshorne, a Director at National Grid Ventures in the US, says: “Storage enables further renewable generation, both from an operational and reliability perspective. It’s also a key piece of our utility customers’ ongoing evolution and transition to renewables.”

 

How exactly does a battery storage system work?

Battery energy storage systems are considerably more advanced than the batteries you keep in your kitchen drawer or insert in your children’s toys. A battery storage system can be charged by electricity generated from renewable energy, like wind and solar power.

Intelligent battery software uses algorithms to coordinate energy production and computerised control systems are used to decide when to store energy or to release it to the grid. Energy is released from the battery storage system during times of peak demand, keeping costs down and electricity flowing.

This article is concerned with large-scale battery storage systems, but domestic energy storage systems work on the same principles.
 

What renewable energy storage systems are being developed?

Storage of renewable energy requires low-cost technologies that have long lives – charging and discharging thousands of times – are safe and can store enough energy cost effectively to match demand.

Lithium-ion batteries were developed by a British scientist in the 1970s and were first used commercially by Sony in 1991, for the company’s handheld video recorder. While they’re currently the most economically viable energy storage solution, there are a number of other technologies for battery storage currently being developed. These include:

• Compressed air energy storage: With these systems, generally located in large chambers, surplus power is used to compress air and then store it. When energy is needed, the compressed air is released and passes through an air turbine to generate electricity.

• Mechanical gravity energy storage: One example of this type of system is when energy is used to lift concrete blocks up a tower. When the energy is needed, the concrete blocks are lowered back down, generating electricity using the pull of gravity.

• Flow batteries: In these batteries, which are essentially rechargeable fuel cells, chemical energy is provided by two chemical components dissolved in liquids contained within the system and separated by a membrane.

Prescott Hartshorne says: “The next decade will be big for energy storage in general and for batteries in particular. It will be an important proving time for batteries and for other technologies.”
 

Last updated: 9 May 2023
The information in this article is intended as a factual explainer and does not necessarily reflect National Grid's strategic direction or current business activities.