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How Grid Energy Storage Works

Economics of Grid Energy Storage

"When it comes to actual costs, energy storage is not cheap," says Imre Gyuk.

We can see where costs stand today, but they'll drop as more storage goes onto the grid. Let's start with storage at power plants. As we learned earlier, an electric company may store energy at a power plant to supply power on high-demand days. The plant will need big power all day, and only compressed air and pumped hydroelectric can supply that. For every $700 it pays for a compressed air system, the utility gets 1 kilowatt of electricity, supplied for more than 20 hours, enough to run one coffee maker all day [source: EAC, NSTAR]. Pumped hydroelectric costs more -- $2,250 per kilowatt.

For power that lasts minutes to hours, lithium-ion batteries cost $1,100 per kilowatt (or coffee maker), flywheels cost $1,250 per kilowatt, flow batteries cost $2,500 per kilowatt, and high-temperature batteries like sodium-sulfur cost $3,100 per kilowatt [source: EAC]. And storage in supercapacitors costs even more.

But, according to Gyuk, we get a lot for our investment into storage. We get a grid able to handle more wind and solar power plants, without supply nightmares. We get fewer peaker plants, which means less carbon dioxide emissions and air pollution. And we get protection against outages, which, according to Gyuk, cost 33 cents out of every dollar we spend on electricity [source: Gyuk 2008]. 

Electric power companies and ISOs will pay for storage, if they decide to install it. "The price of storage is coming down. The price of solving the problems in other ways is going up. Pretty soon, these prices are going to cross," notes Boyes, suggesting cost could spur the addition of storage to the grid.

Will consumers' electricity rates fall in the end? Maybe. With enough storage, utilities will be able to generate electricity in a more controlled manner. They'll better use the hardware in the grid, like transmission lines and substations, instead of replacing or enlarging them.

Even if consumers' electricity rates rise, "We'll get a better system," says Gyuk.