Waste and reliability. To meet peak levels of demand, the grid has been massively overbuilt. The Electric Power Research Institute estimates that one-quarter of all high-voltage distribution lines and about one-tenth of all power plants are used, on average, just 5 percent of the time, or 33 hours per month.

That means hundreds of billions of dollars in assets go unused the vast majority of the time. Utilities are recognizing that carefully targeted storage can cost-effectively replace these least-used assets, says Haresh Kamath, program manager for energy storage at EPRI.

“We’re not using most of our assets most of the time,” says Johannes Rittershausen, managing director of Convergent Energy + Power, a developer of energy storage assets. “The challenge is to find ways to address infrastructure needs most efficiently and at the least cost to end users. A well-designed energy storage project can do just that by taking advantage of slack capacity in targeted locations.

“The U.S. grid will require massive investment over the coming decades as infrastructure ages and our society’s peak electricity demand continues to grow,” he adds.

Renewables’ risks. As a rule of thumb, grid experts believe that when intermittent power sources such as wind and solar surpass 20 percent, grid instability soars. And where that figure once seemed high, it is routinely being surpassed in many regions.

Storage boosts the value of renewables in two ways: by stepping in to provide power when renewable output drops off, and by mopping up excess output when solar or wind power exceed demand.

In February of this year, wind output set a record in Texas, briefly cranking out more than 28 percent of the power demands of the Electric Reliability Council of Texas, which manages the flow of about 85 percent of the state’s electric power. California’s goals for renewables are the nation’s highest, with a mandate to hit 33 percent by 2020. Roughly 20 more states, home to the majority of the U.S. population, have set goals of 20 percent or more.

Storage boosts the value of renewables in two ways: by stepping in to provide power when renewable output drops off, and by mopping up excess output when solar or wind power exceed demand.

“For the first time, the growth of renewables means we’re facing unpredictable supply,” says Lin. Demand will also grow less predictable as more electric vehicles come on line. “Plus it’s hard to find locations for new plants or transmission lines,” Lin adds. “Storage speaks to all these problems.”

Top Contenders

A menagerie of exotic new storage technologies — including thermal storage, flywheels and compressed air storage — are developing fast, but haven’t yet achieved commercial-scale viability. For now, advanced battery-based storage is the hottest of the grid’s newcomers, thanks to rapid declines in the price of Li-ion batteries.

Serendipitously, a key impetus for this trend started in the auto sector, where rising sales of battery-packed hybrids and electric vehicles are driving carmakers’ appetites for advanced Li-ion batteries. This is spurring new manufacturing capacity, driving prices down globally. Driven largely by rising demand from car companies, industry and utilities, the global Li-ion market is slated to double over the next four years, to around $24 billion, according to a recent Frost & Sullivan report.

As prices fall, Li-ion batteries are finding new niches. For now, at around $2,000 per kilowatt-hour, battery backup remains too costly for most applications. But they do pencil out for deep-pocketed utilities in key situations, where their ability to deliver large pulses of power is highly valued.

In January, for example, Duke Energy completed a 36 MW energy storage system at its Notrees Windpower Project in West Texas. Designed and installed by Austin-based Xtreme Power with funding from the U.S. Department of Energy, the $44-million system is the world’s largest wind-linked storage unit, made up of thousands Li-ion battery cells.

According to financial service company UBS, the cost of storage dropped by 40 percent over the past two years, and analysts expect the slide to continue, or even accelerate. At around $500 per kWh, EPRI estimates more than 40,000 MW of potential demand will enter the market. At that price point, residential-scale battery backup may become a reality. Pilot trials of such household-scale backup appliances are underway near Sacramento, Calif.

Installed in the garages of 15 solar-powered homes, Li-ion battery packs the size of small file cabinets hold enough juice to supply a few hours of power. The systems are designed to let the homes go off grid during periods of peak demand, saving homeowners money while reducing stress on the network.