As the global shift towards clean energy continues, energy storage systems are critical in transforming how we generate, store, and consume electricity. The energy storage market nearly tripled in 2023, the most significant year-on-year gain on record. The growth is driven by government mandates and targeted subsidies, as well as the need to balance renewable energy sources, improve grid reliability, and enable consumers to manage energy more effectively.
Understanding the different energy storage applications is essential to grasp the full potential of energy storage. Energy storage applications can be broadly classified into front-of-the-meter and behind-the-meter applications. Front-of-the-meter applications serve utilities and grid operators by enhancing grid stability. In contrast, behind-the-meter applications empower consumers to optimize energy usage, reduce costs, and improve energy resilience. This article will explore the applications of energy storage systems in detail to understand how energy storage is utilized.
Energy Storage Applications: Front-of-the-Meter (FTM)
Front-of-the-meter (FTM) refers to energy storage systems connected to the grid at the utility level before electricity reaches the end-users. These systems help stabilize the grid, manage large-scale energy demands, and support renewable energy integration.
Energy Arbitrage
Energy arbitrage involves grid operators buying wholesale electricity when prices are low, storing it in a battery energy storage system, and reselling it when prices are high. This application allows operators to capitalize on price fluctuations in the market, helping offset energy costs.
Load Following
Load following is often considered a subset of energy arbitrage. It involves adjusting the electricity output of energy storage systems to match real-time fluctuations in demand. As demand rises, stored energy is output, and as demand decreases, storage systems input or absorb excess generation. For instance, a battery energy storage system would discharge when demand increases and charge when demand decreases. This application helps maintain grid stability by ramping up or down the electricity supply based on consumption data.
Frequency Regulation
Frequency regulation involves balancing supply and demand on a second-to-second basis to maintain the grid’s stable Alternating Current (AC) frequency, typically 60 Hz or 50 Hz, depending on the region. If power demand exceeds supply, the frequency drops, risking power outages. In contrast, if power generation exceeds demand, the frequency rises, which can cause damage to the grid or connected devices. With millisecond-fast response times, battery energy storage systems are increasingly used for frequency regulation applications. They help grid operators manage the growing variability in supply and volatility in frequency caused by renewable energy sources, helping to ensure grid stability.
Voltage Regulation/Voltage Support
Voltage regulation or voltage support utilizes energy storage systems to maintain stable voltage levels on the grid. These systems inject or absorb reactive power to maintain consistent voltage and prevent fluctuations. The injection of reactive power is crucial to compensate for losses along transmission and distribution lines. Energy storage, particularly battery energy storage, is increasingly being used for this application due to its fast response times and ability to be located close to end users.
Reserve Capacity
Reserve capacity ensures that power flow and frequency remain stable if a power-generating asset goes offline. Traditionally, generating assets would be run with a small percentage of reserve capacity, which would only be used in emergencies, such as unexpected surges in electricity consumption or generation outages; this is a highly inefficient method as the generators are not utilized to their full potential. Fast-responding energy storage systems like batteries, capacitors, and flywheels can replace this, allowing generators to operate closer to total capacity. Reserve capacity is divided into:
- spinning reserve – responds within 10 seconds
- supplemental reserve – responds within 10 minutes
- backup supply – responds within one hour
These storage systems provide quicker, more efficient responses, reducing waste and maintaining grid stability.
Renewable Energy Firming
Renewable energy firming uses energy storage systems to stabilize the variability of renewable sources like solar and wind. When renewable generation exceeds demand, like during windy nights or sunny days, excess energy can be stored and released later during low generation or peak demand periods. This application smooths out fluctuations in renewable energy output, ensuring a more consistent and reliable power supply. By firming intermittent renewables, energy storage helps utilities integrate more clean energy into the grid while maintaining grid stability and reducing fossil fuel reliance.
Transmission and Distribution (T&D) Deferral
As electricity demand grows, energy storage systems can defer or reduce the need for costly transmission and distribution infrastructure upgrades. This storage application offers cost savings by avoiding buying new equipment. It also allows the same energy storage system to be used for other applications. This dual purpose maximizes the financial and operational return on investment for energy storage.
Transmission Congestion Relief
Congestion occurs when the demand on a transmission line exceeds its capacity. Grid operators charge utilities higher prices to use these transmission lines at peak times. By deploying energy storage systems downstream of areas of congested transmission, electricity can be stored during peak congestion times and dispatched when the congestion level eases. This application helps reduce transmission bottlenecks and lowers associated costs.
Black Start
In a grid-wide power outage, energy storage systems can provide the necessary power to restart the grid, an application known as a black start. Battery energy storage systems are ideal for black start applications, as they can operate independently without a grid connection. This grid independence allows them to provide the initial power to restart other grid systems after a blackout. Unlike traditional generators, batteries can quickly energize other grid systems, enabling faster and more efficient recovery after power outages. Their ability to supply power almost instantly makes them a reliable option. There have been examples of grid-wide outages in Italy, the United States, and Australia, all of which required a black start.
Applications of Energy Storage: Behind-the-Meter (BTM)
Behind-the-meter (BTM) refers to energy storage systems installed on the consumer side of the electricity meter. These systems are used primarily by commercial and industrial (C&I) and residential customers in applications to optimize energy usage, reduce costs, and increase reliability.
Solar Plus Storage
When combined with solar panels, energy storage enables consumers to store excess solar energy generated during the day for use during the evening or on cloudy days. This application maximizes self-consumption and reduces reliance on the grid, leading to lower electricity bills. This energy storage application is valuable in locations where utilities offer little financial incentive to feed excess solar energy back to the electric grid. Solar Plus storage is ideal for both residential and commercial battery storage.
Time-of-Use Bill Management
In areas with time-of-use (TOU) pricing, energy costs vary depending on the time of day. Energy storage allows consumers to take electricity from the grid during off-peak hours when prices are lower, store it, and then use it during peak hours when prices would typically be higher to reduce energy costs. These cost savings are achieved primarily through a strategy known as load shifting.
Demand Charge Reduction
Many commercial and industrial customers globally face electricity bills based on not just their energy consumption but also their highest peak power draw. This fee for the highest peak power draw used over the billing period is a demand charge. It can make up 30% – 70% of the electricity bill. Energy storage helps to reduce demand charges by discharging stored energy during periods of peak power draw, known as peak shaving, effectively reducing the customer’s peak demand.
EV Charging Infrastructure
Energy storage systems support EV charging stations by storing energy drawn during off-peak hours and discharging it during high-demand periods. This application reduces grid strain and lowers operational costs, including demand charges. Additionally, energy storage can stretch available power, allowing more powerful DC fast charging stations without needing costly grid upgrades. By buffering the power supply, battery storage systems ensure that EV chargers can operate at higher power outputs, delivering quicker charging to vehicles while minimizing the need for significant infrastructure changes.
Demand Side Response (DSR)
Demand-side response (DSR) involves adjusting electricity consumption in response to signals from the grid, typically during periods of high demand. Residential and commercial consumers reduce or shift their energy use to help balance supply and demand, often in exchange for financial incentives. Using energy storage systems, consumers can store power drawn during off-peak hours and discharge it during peak times, allowing them to participate in DSR programs without disrupting operations. DSR supports grid stability while offering revenue-generating opportunities for consumers.
Uninterruptible Power Supply (UPS)
Energy storage can act as an uninterruptible power supply and provide backup power during a power outage. This application ensures critical operations and systems can continue without disruption, enhancing reliability for businesses and residential customers. Recent studies show that blackouts and power outages have worsened in number and duration, emphasizing the need for robust and reliable backup power.
Microgrids
Microgrids are localized energy grids that can operate independently or in conjunction with the electric grid. Energy storage enables microgrids to store and intelligently manage energy from renewable sources, providing reliable power during outages or when disconnected from the electric grid.
Energy storage systems are essential in modernizing how we produce, store, and consume electricity. From stabilizing the grid at the utility level through front-of-the-meter energy storage applications like energy arbitrage, frequency regulation, and voltage support to empowering consumers behind the meter with tools for demand charge reduction, time-of-use management, and enhanced resilience, energy storage technology plays a pivotal role in optimizing energy use. As renewable energy expands, energy storage’s flexibility, efficiency, and reliability will be increasingly vital in supporting a cleaner, more resilient energy future.
