Benefits of a Distributed Energy Storage System
Increasing consumer preference for environmentally friendly e-vehicles has been a major driving force behind the growing demand for distributed energy storage systems. These systems are used to store energy generated by renewables for use during peak electricity demand times.
Energy storage can also benefit rural communities that are farther from the grid, improving community resiliency and providing economic benefits to low-income and minority communities.
In addition to helping reduce energy costs, a distributed energy storage system can also be used for grid resilience. As the world shifts away from fossil fuels and towards renewable energy sources, a distributed energy storage system can help make the transition smoother by reducing power shortages and power outages. A distributed energy storage system can also help avoid peak pricing by reducing demand when prices spike, such as during heat waves when electricity use skyrockets and electricity prices.
Energy storage technology can be used in both the transmission and distribution systems of a power grid. Transmission-level energy storage uses large batteries or flywheels with a capacity of tens of megawatts or more. Energy storage in the distribution system can be smaller and is typically used for frequency regulation. For example, the US company Beacon Power operates a series of flywheel short-term energy storage plants in New York and Pennsylvania that are capable of providing up to 20 megawatts during high electricity demand.
The LEED credit for Designing for Enhanced Resilience offers options for incorporating DER technologies into projects to improve their ability to withstand and recover from disruptive events such as storms, fires, wildfires, flooding, sea-level rise, tornadoes, earthquakes, tsunamis, drought, extreme heat, and winter cold. The credits include provisions for solar PV and storage, CHP, microgrids, and energy efficiency. FEMP’s Kickstart Your Federal Microgrid Project: Financing Opportunities and Best Practices fact sheet provides a step-by-step guide for implementing DER projects to achieve cost savings and resilience.
Increased Energy Efficiency
As energy storage can quickly start discharging power to the grid in a fraction of a second, it has become highly valued by utilities for providing frequency regulation and spinning reserve services. These distributed energy storage system operations help reduce congestion on the transmission and distribution networks, resulting in higher electricity efficiency and reduced costs to consumers.
Energy storage also helps to reduce electricity costs for businesses and residents that install behind-the-meter (BTM) energy storage or plug-in electric vehicles (EVs). By storing low-cost energy when prices are cheap, it can be used later during peak periods when electricity is expensive. This can also mitigate costs for those customers who participate in demand response programs.
Furthermore, a network of BTM and EV energy storage can be integrated into community-level microgrids or resiliency hubs to provide backup power to local businesses and households during brief outages. This can help to prevent costly disruptions to business and keep residents safe from the risks of exposed food, medicines and other critical goods during outages.
Many commercial and industrial facilities are subject to peak demand charges, which can represent up to 50 percent of a facility’s total energy bills. While energy efficiency and solar PV can lower electricity consumption, they may not coincide with a facility’s peak demand period. An energy storage system, however, can track a building’s load profile and reduce demand charges by dispatching battery power during periods of peak use.
Reduced Utility Bills
The integration of energy storage can help consumers avoid the electricity price spikes that occur during periods of high demand. These spikes can be caused by weather events, holidays, or even the hottest days of summer when everyone is running their air conditioners. Energy storage reduces peak pricing and allows utilities to pass those savings on to their customers.
Another way that storage can benefit customers is by helping them avoid power outages. This is particularly important in areas that are farther away from the grid, such as on islands or microgrids. Energy storage can provide backup power to those areas, allowing them to operate independently during outages.
For businesses, implementing long-duration battery systems can offer significant value by lowering demand charges and maintaining operational uptime during outages. In addition, these systems can also earn revenue in the marketplace by bidding their capacity into ancillary services contracts or merchant markets.
However, it is critical to recognize that the private benefits of distributed distributed energy storage system energy storage are likely to be impacted by the ability of small EES systems to be centrally coordinated through aggregation. This is because consumers are unlikely to be able to maximize both their electricity costs and arbitrage benefits when their resources are operated by themselves in an uncoordinated manner. This is illustrated in the chart below.
Reduced Carbon Emissions
The growth of EVs and renewable energy use has driven the demand for batteries. EV batteries require lithium-ion technology because it offers an optimum combination of high energy density, low cost, and long life cycle for a mobile power source. Lithium-ion batteries are also used in grid storage systems, because they can be dispatched to provide grid services when needed, like regulating voltage and providing fast response.
The use of energy storage reduces carbon emissions, primarily by replacing fossil fuel peaker plants. Peaker plants operate during limited times of the year at periods of peak electricity demand, and they typically burn natural gas (although some use coal, oil, or diesel fuel) to meet these needs. Energy storage can replace these peaker plants and their emissions, reducing air pollution in urban areas, and avoiding the need to build new generation capacity that would otherwise contribute to climate change.
PNNL has been investigating various options to make renewables and other sources of electricity more reliable and accessible by deploying energy storage solutions at the network level, rather than just as individual physical batteries. These solutions involve optimizing and integrating DERs with energy storage using tools and methods that shape and shift electrical loads and generation much like a battery does, as well as exploring deferrable load technologies—electrical load uses that can be temporarily reduced or interrupted without affecting critical functions, such as water desalination and computational loads.