Getting Energy Storage Right

May 3, 2018

One particularly bright spot in the ongoing energy revolution is the rapid drop in the cost of energy storage technologies, and the multiplying types of storage being developed around the world.

However, the technology is double edged. On a grid that is still heavily carbonized, storage can actually increase carbon emissions.

Institute for Policy Integrity – Managing the Future of Energy Storage:

Energy storage systems, undoubtedly, will be a key part of the future of the electric grid. They have the potential to provide many benefits to the grid, such as lowering the price of electricity at peak demand times, and deferring or avoiding new capacity investments. However, contrary to the prevailing wisdom, energy storage is not guaranteed to reduce emissions, and may, in fact, increase emissions if policies are not designed carefully. Further, while this oft -cited (but not guaranteed) benefit of storage dominates headlines in policy discussions around the country, many other types of benefits that energy storage systems can provide are not well recognized in policymaking.


Longish summary from Vox excerpted here.
Shortish summary: We need a damn carbon price.


By way of background, it’s important to understand that while energy storage can provide a wide array of services to the grid (more on that later), these days it is primarily used for energy arbitrage — storing energy when it is cheap (usually at night) and discharging it when it is more valuable (usually during the day).

There are two reasons why energy storage deployed for the purpose of arbitrage increases emissions:

1) Storage increases the value of the energy sources it draws from (a source that can store some of its energy can generate more) and decreases the value of the energy sources it competes against when discharging. If the energy sources it draws from are more carbon-intensive than the energy sources it competes against, then it will have the effect of increasing the carbon intensity of the overall power mix.

Say a battery bank absorbs cheap energy being produced by coal plants overnight and then discharges it in the day, competing with natural gas combined-cycle (NGCC) plants. The net effect will be to favor coal against natural gas, thus increasing net emissions.

2) Every bit of energy stored also represents a bit of energy lost. The “round-trip efficiency” of energy storage — the amount of energy it releases relative to the amount put in — ranges, depending on the technology, from around 40 to 90 percent.

Let’s take, for representative purposes, 80 percent, a relatively optimistic assumption for the efficiency of lithium-ion batteries. For every 1 megawatt-hour put in, 0.80 megawatt-hours comes out.

That means, if it is stored along the way, getting 1 MWh to the customer requires generating 1.25 MWh. The more energy that gets stored, the more generation has to increase to compensate for the round-trip losses.

If the generation that increases to compensate for the losses is more carbon-intensive than the energy that storage displaces, net emissions nudge up.

Even when a battery stores zero-emissions renewable energy, it is not increasing or decreasing total generation; it’s just moving it around (unless the renewables would otherwise have been curtailed; see below). If coal steps in to cover for the renewable energy that is stored, but it displaces natural gas when it’s discharged, it still might increase net carbon emissions.

Theoretically, the emission-boosting effects of energy storage will decline as grids get greener. But they will have to get quite a bit greener. In a separate paper, Hittinger and colleagues model the emission effects of energy storage on a grid with increasing renewables. They find that in the Midcontinent ISO (MISO), the coal-heavy Midwestern regional energy market, wind and solar would have to reach 18 percent of total generation capacity before storage started reducing emissions on average. And that’s with today’s low natural gas prices. If natural gas prices increase, it would take even longer.

(There’s one important exception to note here: When and if it stores renewable energy that would otherwise have been curtailed, i.e., wasted, then energy storage clearly reduces net emissions. That’s not very common in the US today, but it could get more common as renewable energy grows.)


Owners of energy storage who seek to maximize their profits will store whatever energy is cheapest and displace whatever is most expensive, with no concern for carbon emissions. That’s because there’s no value put on avoiding carbon emissions — that is to say, there’s no price on carbon.

An economy-wide carbon price would be nice, though it doesn’t seem likely anytime soon. Next best would be working some kind of carbon price into regional energy markets, which would require coordination between state regulators, regional market managers, and utilities.

Third best would be better cost-benefit analysis in state energy procurement policies, which could take carbon emissions — in both construction and operation — into account.

And there are various other fourth-best kludges, ways of wedging a de facto price on carbon into markets. Eventually, though, we need a damn carbon price.

Hittinger told me on the phone, and I more or less agree, that the right way to grow energy storage markets is to deploy the hell out of renewable energy and let the need for storage determine its growth. It is still entirely possible that, through whatever mix of transmission buildout, smart-grid improvements, and market reforms, we’ll end up needing less storage than we think. Market pull should determine where and when storage is deployed.

But that means getting markets right — the one thing pretty much everyone agrees is crucial to smart use of storage.

I am not opposed in principle to technology-specific public policies — far from it! — but the rational deployment of energy storage, a technology with mixed and complex effects, seems like exactly the kind of problem markets are good at solving.

Put in place a market that values carbon, capacity, ramping, voltage regulation, and all the other services storage can provide, lower barriers to entry, set up transparent rules, and let profit-seeking companies battle it out. That market will be better at determining the proper amount and location of storage than any group of policymakers.
So energy storage, much like electric vehicles, is dependent on the grid within which it operates to optimize the carbon cutting advantage.


7 Responses to “Getting Energy Storage Right”

  1. Gingerbaker Says:

    I find it astonishing that energy storage would be used to store anything but excess renewable energy. I would like to see hard figures on whether it is actually being done, or is this just theoretical?

  2. indy222 Says:

    Yes, doesn’t surprise me. Jevons’ Revenge strikes again.

    Click to access A7-K43-Garrett.pdf

  3. Andy Lee Robinson Says:

    I’m doing my bit – have collected thousands of lithium cells and got enough good ones to build an 8kWh battery for free (and a lot of time). I can use this for my ebike or home inverter, or even an EV. There’s more capacity here than used in a Twizy for instance, and I am still collecting cells to add to it.
    Fascinating, educational, useful and rewarding!

    If anybody would like to learn more about doing this, head over to

  4. Glenn Martin Says:

    I’ve read that storage could effectively double the energy got out of wind farms by storing excess power that the grid doesn’t need at the time of production. Since this is more valuable than simple time shifting then this is likely the most likely use of storage capacity. Mind you, domestic installations already make financial sense because of time shifting and since batteries are about 40% of the cost of a house PV installation, they pave the way for more solar in the future.
    I’ve always thought the hollow towers wind turbines were mounted on could be used for storage. Why not put batteries there?

  5. Back to Elon’s mega battery in South Australia. Reports in the first quarter, have it responding to a supply crashout in micro seconds and ‘preventing a blackout’. Storing excess electricity at minus $1000 mwh, good for the operator. More relevant to the post, a unofficial but believable report, maintains it has saved $30-$40 million ( and a lot of GHG ), by reducing contingency power requirements of power suppliers. My limited understanding is, that all suppliers have contingency power on tap, for grid frequency maintenance etc. Note that any further batteries will be competing in these areas and have little effect. So far, great!

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