Utilities must maintain capacity resources to meet system demand peaks, which can make up fewer than five percent of the year. Building and/or procuring excess generation and transmission capacity to address peak demand is costly. Energy storage systems can help utilities address peak demand when sited—anywhere from transmission system to behind the meter—and shift excess renewable or off-peak power to peak times. The capabilities and declining costs of battery systems have led some industry leaders to suggest that simple cycle peaking plants may be obsolete in the next decade.

While total electric consumption in the United State has been relatively flat over the past several years, load pockets are changing and growing as populations become denser and as transportation becomes increasingly electrified. These changes put increasing demand on a small number of circuits that require capacity upgrades. Energy storage can delay or mitigate completely the need for these upgrades, when placed strategically downstream of choke points on these circuits. Storage-assisted asset deferrals that range from 5-9 years can make compelling business cases for utility owners.

Utility-scale renewables are the most cost-effective resources in the majority of the country, and distributed renewables are at or below grid parity in 14 states today. Continued cost decreases in these technologies, renewable portfolio standards, and incentives, such as the U.S. investment tax credit, will drive adoption through the end of the decade. Furthermore, environmental pressures are making the economic siting of traditional generation more difficult. To take full advantage of renewable resources, flexible assets are needed to manage the intermittency of these resources. The qualities of energy storage make it an ideal option to support the integration of renewable generation into power systems.

Increasing renewable penetration and changing load demand more from the utility to maintain consistent frequency and voltage within mandated ranges. “Smart” power electronics can solve some of these issues, but not all—especially those that require real power. Energy storage coupled with “smart” power electronics can help the utility to maintain an efficient and stable distribution system.

Consumers are demanding more from their utility service providers. And now, with viable, cost-competitive alternatives to the utility, customers have the option to leave the utility if reliability of service fails to meet their expectations. Additionally, as regulatory commissions increase penalties, reliability standards or implement pay-for-performance schemes, utilities will be under pressure to find new solutions to increase already high reliability. Energy storage offers the utility the ability to increase reliability on sections of circuits that suffer from a higher frequency of outages and, in some cases, avoid system upgrades (e.g., undergrounding feeder sections) to increase reliability.