Energy Storage: Applications and Developing Regulation

Posted on June 6th, 2011 by

The following article is part 1 of a multi-part series.

Energy storage systems convert electricity into chemical, kinetic, thermal or potential energy until needed, whereupon it is then converted back into electricity.  Energy storage systems are capable of providing both large and small scale energy service. End-Users, distribution, transmission and generation providers can utilize energy storage systems to perform various energy service applications. As new energy storage technology matures and becomes commercially viable, the need for regulators to enact appropriate energy storage regulation heightens.

Regulation will provide clarity for energy storage providers and utilities in developing appropriate business models and uses for energy storage systems. Regulators must investigate energy storage applications and enact regulations that reflect its unique operational characteristics (i.e., performance benefits and costs). Similar to the effects that gas storage had on the gas industry, energy storage can further advance the goals of improved reliability and efficiency sought by the restructuring of the electric industry.[1]

I.            Energy Storage Applications

Energy storage systems can perform energy service applications at the generation, transmission and distribution levels of electricity delivery. The versatility of some energy storage technologies allows one storage system to perform multiple applications at each level. Energy storage systems promote efficient use of generation resources in energy markets, improve efficiency and reliability in ancillary services that are vital to the integration of renewable generation projects, improve reliability in transmission and distribution systems and provide a clean alternative to traditional generation and transmission resources.

There are four categories of energy storage applications:  1) end-user; 2) transmission and distribution support; 3) ancillary services; and 4) generation storage.

A.            End-User:

End-user energy storage systems allow the consumer to manage electricity costs, and improve reliability and power quality. Furthermore, storage systems may potentially add value to consumer installed renewable power systems such as photovoltaic systems and wind turbines by time-shifting energy stored during less expensive time periods for use during more expensive time periods. Storage systems may also play an integral part in developing potential energy service applications for integrated automobile batteries.

1.            Energy Cost Management (Demand Charge Management):

Energy cost management allows consumers to lower their electricity demand (load) during peak time periods in an effort to reduce energy costs.[2] Similarly, by reducing load during applicable demand charge time periods, consumers avoid demand charges. Energy storage systems store energy during off-peak time periods when energy prices are low and release energy during peak time periods when energy prices are high.  The consumer experiences a cost savings in the amount of displaced peak consumption. For example, if peak rates are .15¢ /kWh and off-peak rates are .5¢ /kWh, the result would be a savings of .10¢ /kWh for any reduction in peak load displaced by energy stored at off-peak times. The cost savings will vary depending upon the utility’s rate tariff.

2.            Electric Service Reliability & Electric Service Power Quality:

Energy storage systems can provide improved electric reliability and power quality to commercial consumers. Energy storage systems installed onsite provide improved electric reliability by discharging stored electricity during brief moments of power loss. During brief power outages, energy storage systems allow consumers to properly shutdown equipment, maintain power, and provide power while transitioning to onsite generation.[3]

Power quality refers to the concept of powering and grounding sensitive electronic equipment in a manner that is adequate for the proper operation of equipment.[4] The occurrence of variations in voltage magnitude[5], primary frequency (60Hz), harmonics[6] and brief interruptions of service indicate poor power quality.[7] Poor power quality increases stress on consumer equipment resulting in a reduction in performance and potential equipment failure. Onsite energy storage systems offer reliable protection for facilities or equipment that are highly susceptible to poor power quality.


[1] Derived from an interview with Joseph Desmond, Ice Energy, April 2011.

[2] This practice is often referred to as peak-shaving.

[3] Eyer, J.M., & Corey, G. Energy Storage for the Electricity Grid: Benefits and Market Potential Assessment.  SANDIA National Laboratories Report # SAND2010-0815.  February 2010.

[4] Kueck, J.D., Kirby,B.J., Overholt, P.N., & Markel, L.C.  Measurement Practice for Reliability and Power Quality:  A Toolkit of Reliability Measurement Practices.  Prepared by Oak Ridge National Laboratory, Managed by UT-BATTELLE, LLC, Prepared for the US Department of Energy.  Oak Ridge National Laboratory Report # ORNL/TM-2004/91.  June 2004.

[5] Sudden increases or decreases or long-term sags in voltage.

[6] Harmonics are currents or voltages that differ from the primary frequency.  Harmonics reduce performance by placing greater stress on consumer equipment, which may lead to equipment failure.

[7] Ibid. [3].


Written by Robert Clifford. Robert is a Boston-based attorney who represents clients before the Federal Energy Regulatory Commission and state public utility commissions.

Related Posts:

Tags: , , , , , , , , ,

Spam Protection by WP-SpamFree