Electric Energy Storage


  • Electric energy storage can make it easier to serve customers during high-demand periods without increasing electricity production capacity.
  • Electric energy storage can also increase the predictability of integrating renewables like wind and solar onto the power grid.
  • Currently, global storage capacity is less than 2 percent of the total electric power production capacity.
  • Costs for batteries have decreased significantly in the past few years and are expected to continue to decline. Electric energy storage can also help reduce costs by potentially deferring the need to build new transmission or generation.


Electric energy storage technology can make it easier to deploy renewables on a large scale by providing electricity when renewables can’t. Wind power produces electricity only when the wind is blowing, and solar power only when the sun is shining, making it harder to match electricity supply with demand. Traditional baseload (e.g., coal and nuclear) and other dispatchable (e.g., natural gas) generation can be scheduled to produce power in specific amounts at specific times.

Storage technology, however, can take electricity produced by renewables at off-peak demand times and feed it onto the grid during peak demand periods. Using stored electricity from renewables instead of increasing fossil fuel-fired generation can reduce greenhouse gas emissions. These reductions can be maximized by ensuring the mix of electricity used to charge the storage technology is very low-carbon. However, electric energy storage could increase greenhouse gas emissions if electricity from less expensive high-carbon baseload coal power plants is stored and replaces more expensive peaking power from lower-carbon natural gas generators.

Storage can defer new generation and transmission investments, improving grid reliability and stability at a lower cost. In addition, energy storage can provide other benefits known as ancillary services—those that are needed for an efficient, stable and reliable electricity grid. Storage can also help during extreme weather events. During Hurricane Maria in 2017, 20 MW of energy storage provided critical grid reliability in the Dominican Republic.


There are several storage methods, varying in the amount of energy stored, the length of storage time, and how quickly stored energy can be released. Some technologies are more appropriate for providing short bursts of electricity for power quality applications, such as smoothing the output of renewables from hour to hour (and to a lesser extent, within a time scale of seconds and minutes). Some highly sensitive equipment such as computers can fail if the flow of electricity is not smooth and predictable.

Other technologies are useful for storing and releasing large amounts of electricity over longer time periods (known as peak-shaving, load-leveling, or energy arbitrage). Renewable electricity or other available output can be stored during periods of low demand and released 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. Electric energy storage could be used to shift this output to periods of high demand. Similarly, storage could capture excess overnight generation from a baseload nuclear power plant.


One-day load profile of a large-scale electricity storage system.

The use of electric energy storage is limited compared to the rates of storage in other energy markets such as natural gas or petroleum, where reservoir storage and tanks  are used. Global capacity for electricity storage, as of September 2017, was 176 gigawatts (GW), less than 2 percent of the world’s electric power production capacity. Of that global storage capacity, 24 GW is in the United States (about 2.2 percent of U.S. production capacity).

The major technology options deployed worldwide include:

  • 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), water is released 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 100–1,000 megawatts (MW) and discharged over a long time (7–13 hours or longer). More than 90 percent of U.S. energy storage capacity is pumped hydro. The United States has 22 GW of power installed at 50 operational pumped hydro facilities. The use of this technology is limited by the availability of suitable geographic locations.
  • Rechargeable Batteries – Several types of large-scale rechargeable batteries can be used for electric energy storage, including sodium sulfur (NaS), lithium ion, and flow batteries. Unlike traditional batteries, flow batteries use fuel that is external to the battery. The fuel flows through the battery to generate electricity through an electro-chemical process. Batteries could be used for both power quality and load-leveling. In addition, when electric vehicles become more widespread, their batteries could be used for energy storage, providing ancillary or regulation services. In some cases, they could provide load-leveling or energy arbitrage services by recharging when demand is low to provide electricity during peak demand. Lithium-ion batteries have the highest installed capacity worldwide, followed by sodium and lead acid batteries. There are 950 MW of U.S. Department of Energy (DOE) verified commercial battery projects operating worldwide.
  • Compressed Air Energy Storage (CAES) – This 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 helps 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 discharged over long periods. There are two operational CAES projects around the world, among a few small scale demonstration projects.

Other forms of energy storage include: thermal energy storage (TES), hydrogen fuel cells and hydrogen fueled gas turbines, flywheels, ultracapacitors, and superconducting magnetic energy storage (SMES).


The up-front capital costs of electric energy storage vary by technology and capacity. Total capital costs per unit of power capacity for most storage technologies are high compared to a $1,000–$1,350/kW natural gas power plant.

A Lazard study published in December 2016 showed the costs of most battery storage technologies had declined, although cost varies based on the specific technology type and use. The capital cost of lithium-ion based batteries, for example, had decreased 24 percent, to $386–$917/kWh, from Lazard’s previous study in 2015. Below is a table that summarizes the current capital costs of other storage technologies.

Storage Technology Capital Cost Range ($/kWh)
Compressed Air $116 – $140
Pumped Hydro $152 – $198
Flow Battery (Vanadium) $314 – $690
Flow Battery (Zinc-Bromine) $434 – $549
Flow Battery (Other) $340 – $630
Lithium-Ion Battery $267 – $561
Sodium Battery $301 – $784



Lazard (2016)

In addition, the International Renewable Energy Agency (IRENA) projects battery capital costs will decline in the next few years:

Battery Electricity Storage System Energy Cost Reduction Potential, 2016-2030

Policy Options

Carbon Price

A price on carbon, such as a greenhouse gas cap-and-trade program, would raise the cost of electricity produced from fossil fuels relative to low-carbon sources. Electric energy storage would then have increased value where relatively inexpensive low-carbon electricity could be stored to displace carbon-intensive power.

Real-Time Electricity Pricing

If consumers were charged a real-time, dynamic price for electricity, the high cost of peak electricity would be transparent, and investments in electric energy storage to reduce peak load would have greater value. A national smart grid would facilitate real-time electricity pricing. California has started transitioning its commercial, industrial, and agriculture customers to this pricing structure as a result of a directive from the California Public Utilities Commission.


Statewide mandates can increase deployment of electric energy storage technologies. California, Massachusetts, Nevada, New York, and Oregon have instituted statewide storage mandates of varying scales.

Markets for Ancillary Electric Services

Electric energy storage technologies would benefit from receiving prices set by competitive markets for ancillary electric services such as regulation, spinning reserve, and load-following.

Relaxation of Ownership Restrictions

Electric energy storage can serve generation and transmission functions, but existing deregulated electricity markets place limits on who can own such facilities. Removing restrictions on the ownership of energy storage facilities by end-use customers, transmission owners, or distribution companies could enable greater market penetration.

Integration of Electric Energy Storage in Transmission Planning

Decisions regarding new transmission lines could factor in the location of large-scale electric energy storage sites, demand centers and generation facilities. Investments in energy storage are often less costly than building new transmission lines. The Federal Energy Regulatory Commission could modify rules so that energy storage is subject to transmission pricing incentives and is a part of the transmission planning process.

Basic and Applied Research and Development

Low charge/discharge efficiencies, low cycle lives, and high capital costs make most electric energy storage technologies less economically competitive for smoothing out renewable energy or providing power quality services compared to power plants that provide similar services. Investments and incentives in basic and applied research and development would improve the performance of existing technologies and support breakthroughs for the next generation of energy storage technologies. In 2016, DOE’s ARPA-E program provided $37 million toward a new program to identify how solid ion conductors may improve energy storage by increasing battery capacity and preventing short circuits and degradation.


High Capital Costs

Capital costs of most electric energy storage technologies are still high compared to natural gas generators that provide similar services, but costs for batteries have recently declined significantly and are still expected to continue to do so.

Need for Large-Scale Demonstration Projects

Electric energy storage technologies such as CAES require a few large-scale demonstration projects before utility managers will have the confidence to invest in them. Other types of storage such as SMES will also require large-scale demonstrations before wider adoption can take place.

Transmission Planning Processes

Transmission planning only takes into account the location of demand centers and generation facilities. As a result, geographically remote electric energy storage facilities like pumped hydro or CAES have limited access to the transmission grid.

Regulatory Barriers

Federal and state regulations treat electric energy storage as a type of electricity generation technology rather than as an investment in transmission capacity. Thus, transmission and distribution companies are barred from owning electric energy storage. Another barrier is the lack of utility rate decoupling in states. Since utility profits are typically tied to the volume of energy sales, there is an incentive to sell more energy. Under decoupling, programs like energy efficiency and greater energy storage deployment are more likely to be promoted. In addition, most renewable portfolio standards or government investment or production incentives exclude energy storage, despite the fact that energy storage can enable higher penetration of renewables.

Unfinished Electricity Markets

Most regions of the United States have not yet fully developed markets and transparent prices for all the types of ancillary services that electric energy storage (and generation) technologies provide besides providing electricity, such as regulation, spinning reserve, load-following, and other services.