Energy Storage and Economics

Renewable energy sources are a fantastic idea, but what is the key to making them most accessible? Energy storage. You know, AA batteries, superconductors, a flywheel, a reserve hydroelectric dam. If the goal is to power the grid with renewable energy, then storage systems are necessary to confront the problem of an energy source that produces electricity only at certain times.

The Electricity Advisory Committee of the Department of Energy published a report in December 2008 entitled Battling Electricity: Storage as a Strategic Tool for Managing Variability and Capacity Concerns in the Modern Grid. In it, the committee analyzes the prospective applications of energy storage systems, from generation to transmission and distribution to the end user. They separate the major storage systems into a few categories: first, bulk or distributed, and second, long-term and short-term (energy storage measured in hours as opposed to minutes/seconds).

I can see that renewables have a bleak future unless accompanied by energy storage. I do, however, take issue with two of the committee’s conclusions regarding economics. First, they repeatedly emphasize that energy storage systems can provide “a way to defer investments in transmission and distribution (T&D) infrastructure to meet peak loads…for a time” (EAC 3). While they give convincing evidence that T&D updating does not occur incrementally (which means that putting it off could save money and provide time to more fully research T&D infrastructure), I believe that putting off something that needs to be done is wasteful and lazy, even if you have technology allowing you to procrastinate. Even if it is true that T&D investments should be deferred for the time being, it seems to me that optimism about energy storage is a slippery slope leading to complacency about the grid.

A second benefit they see from energy storage is that it can allow Americans to continue their present lifestyle with no change in electricity consumption, or even an increase in electricity consumption if electric cars get their groove back. On the right-hand column on page 4, there is a delicately worded paragraph basically confirming that people don’t like to pay high prices for something they are used to paying less for. While I agree that transitions are difficult and should be kept as smooth as possible, I also believe that economics is a worthy tool in the hands of those attempting to regulate electricity consumption. Why flinch at charging a higher price for electricity used at peak load times? If the goal is less consumption during those times, once people figure out that electricity costs more at that time, they will fall over themselves to find a way to use less electricity then.

Finally, the report addresses the applications of energy storage systems while brushing over the actual technology. If you are looking for more detail on energy storage technology, go here for a 2001 report by Ribeiro et al.


1 Comment

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One response to “Energy Storage and Economics

  1. dutchflower

    I completely agree with price setting as economic incentive to encourage the right behavior, in this case conserving energy during peak load demand.

    The Pecan Street Project ( is trying to do what you mention. But I worry that attention, and resources, paid to hooking up and monitoring the grid at the user level during peaks (and charging incremental amounts) has a small level of return on the vast, vast investment to hook all of those houses and businesses up with the needed equipment to do so.

    A closer, immediate tactic to meet the same purpose is the example of Austin Energy, which has close to 90,000 homes wired with their “Power partner” thermostats. During peak demand, as I understand it, AE can temporarily (for up to 15 minutes) shut off AC units to reduce demand. the effect is the same, but the need for universal new infrastructure is reduced. Each remote installed at the opt-in request of a customer has the potential to incrementally reduce peak demand. And really, who’s going to notice if their AC cycles off for 5-15 minutes?

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