Grid batteries provide benefits not only for renewable energy sources but also for thermal power plants like coal, gas, and nuclear. These plants typically operate more efficiently when running at a steady pace. Batteries help absorb fluctuations in demand, enabling these plants to maintain optimal efficiency, thus reducing greenhouse gas emissions and costs.
Zahurancik likens this to hybrid cars, such as a Prius, which use an electric motor alongside a gasoline engine to enhance fuel efficiency by managing variations in demand.
Additionally, grid batteries reduce the necessity for expensive grid upgrades, according to Stephanie Smith, Chief Operating Officer at Eolian. Batteries on either the generator or demand side can supply additional electricity when needed, eliminating the need to expand power lines for peak demand.
Smith highlights that the increasing use of stand-alone batteries can ease or potentially replace the need for new transmission builds. These batteries facilitate quicker adaptation to energy demand changes, such as when factories shut down or new data centers come online, leading to a more stable, efficient, cost-effective, and cleaner power grid.
However, lithium-ion batteries have limitations. While grid batteries typically store and dispatch electricity for two to eight hours, there is also a need for long-term storage options to accommodate fluctuations in power demand throughout the year.
Challenges remain for grid-scale storage. Large initial investments are needed, which take years to recoup, and there’s uncertainty about how tariffs on battery imports and potential economic downturns might impact electricity demand. With a growing demand for batteries, competition for raw materials may drive up costs.
China currently dominates the global battery supply chain, but the US is making efforts to become competitive. Under previous administration policies, substantial investments were made in energy storage factories, supply chains, and research. Many US factories are designed for electric vehicle batteries, with 10 new facilities slated to start this year, increasing the EV battery manufacturing capacity to 421.5 gigawatt-hours annually. Global battery manufacturing is expected to reach approximately 7,900 gigawatt-hours by 2025.
A significant backlog exists in connecting new projects to the power grid, particularly for solar, wind, and battery projects. Interconnection queues commonly last over three years due to the need for reliability studies and regulatory paperwork.
The Trump administration is seeking to dismantle certain clean energy incentives, including those in the 2022 Inflation Reduction Act, which provides tax credits for grid energy projects. Smith voices concerns that any changes in clean energy incentives could hinder progress, although tariffs may eventually lead to more domestic battery manufacturing.
Despite rapid advancements, utility-scale energy storage remains a small segment of the US power grid, with potential for significant growth. Zahurancik suggests storage could eventually account for 20 to 30 percent of installed power capacity.
