Energy storage systems can provide a variety of services for various purposes, such as :
- Peak-shaving – It can happen at times that the maximum demand for power in a given area exceeds the available production. This can occur for technical (maintenance or failure of power plants) as well as economic reasons, frequently or just a few times in a year. It can be the case at the beginning of the day, when most consumers require energy to cook meals, get light, use various appliances and heat or cool places (seasonal effects often make it worse). Energy storage can help by providing extra power during the peaks, in effect acting like an additional power producer.
- Load shifting (or arbitrage) – This is when the grid operator can choose to save power at one moment in order to use it later, usually in order to benefit from price differences. Depending on the economic parameters in the grid ecosystem (the energy market), some players will opt in or out and energy storage can help optimize interactions. From a market standpoint, it increases liquidity. Load shifting can be made by energy producers, energy users or an independent storage player.
- Frequency regulation – In order to balance supply and demand at any moment, grid operators need to stabilize the frequency of the grid (for instance at 60 Hz in the United States, 50 Hz in the European Union). Injection of power in the grid is required at times to achieve this. Grid operators typically use several tiers of reserves to regulate frequency and energy storage can be part of them.
- Voltage regulation – Similarly, grid operators need to keep voltage constant (110 V in the United States, 220 V in the European Union) and can use energy storage to achieve this regulation.
- Ramping – Trends in energy production are often different from demand. Whereas consumption is often characterized by large numbers of small and big users, production is carried out by a few power plants and an increasing number of renewable energy operators. Changes in energy production at power plants is typically made by large increments, and renewables cannot be commanded, with sun or wind power missing by moments. The result is that demand trends are smoother than production trends, the latter combining power plants stairs with renewable gaps. Energy storage can help smoothen the production trends, filling in when renewables are missing or adding power progressively before the start of power plant injections.
- Renewables injection – The current state of a grid can make it difficult to accommodate new renewable energy capacities. Sometimes permit requests cannot be granted or are delayed because even if the existing installations could theoretically take in more power, regulation is not possible. Energy storage can solve this kind of issues and help build more wind and solar farms.
- Investment deferral – The other solution to accommodate more intermittent renewables or cope with new instability or growth in the demand is to build more power plants or power lines for a better interconnection. These assets are extremely expensive and require large scale projects. Deployment typically takes years, sometimes a decade can take place between the first studies and commissioning. Energy storage can be a way to defer these investments and lower the risks. It is particularly useful in the current context because of the increasing difficulty of predicting evolutions. Customers are constantly changing the way they use energy, and a large scale project in energy production or distribution could easily miss its target if implementation takes years.
- Black / brown start – In case of a blackout, i.e. failure of part or all of the grid, power must be quickly injected in the grid to restart it. Energy storage can be used for this.
- Congestion management – Power can be temporarily in excess in some parts of the grid, due to imbalances in consumption and production, for instance. This results in inefficiencies, such as too much power being transported in a line and losses accordingly. Energy storage can be used to absorb these extra loads and re-inject them in the grid later.
- Marginal renewables efficiency – Some sources of renewable energy are not electric but can be converted in electricity, such as thermal systems or biomass. In some cases it can make sense to turn into electricity some energy that would be wasted otherwise, but there might not be a demand for this electricity at this time. Energy storage can then be used to generate extra profits from these operations.
- Grid resiliency – From a macroscopic standpoint, energy storage gives more options to grid operators and can help coping with minor or major difficulties in grid management.
- Energy security (general) – At grid level, energy storage improves energy security in several ways. As described above, it can help the grid restart or give options in case of malfunctions. It can also help a country to make use of its own energy resources instead of relying on imported fossil or nuclear fuel. If it is implemented in local grids, it can also make a country less vulnerable to events such as cyber attacks or major disasters, because the blackout of major components of the grid would not necessarily affect these micro-grids.
- Energy security (local) – Energy users sometimes need additional means of supply when their activities cannot be disrupted (emergency services, industrial facilities, etc.). This is often achieved with diesel generators. Energy storage systems can provide this function, with the additional advantage that unlike gensets, that are strictly charges because they do not generate any added value, in some cases energy storage systems can provide other services and partially or totally pay for themselves.
The services provided by energy storage systems are obviously often combined. For instance a battery used for load shifting can also keep some capacity for energy security. A system can be sized for both ramping and peak shaving. An installation that has been purchased so as to be coupled with a solar farm can be a part of a bigger plan aiming at deferring investments.
It is therefore important to analyze all options when considering the business model for an energy storage system. As these services are not provided to a single player but can often benefit to all, from the end user to the community at large, it is worth involving all stakeholders. It is clear that it should be in the best interest of regulators, for instance, to create a friendly environment for energy storage systems, since the impact on energy security and resiliency of energy infrastructures at a macroscopic level can be quite dramatic.