Essential Roles of Batteries in Modern Power Systems

In recent years, California has emerged as a trailblazer in the realm of energy innovation. According to an article by The New York Times, “Since 2020, California has installed more giant batteries than anywhere in the world apart from China. They can soak up excess solar power during the day and store it when it gets dark.” This transformative shift underscores the pivotal role that batteries play in California's electric grid, gradually displacing the reliance on fossil fuels, particularly during peak demand hours. And California isn't alone: Around the world, more and more places are increasing their reliance on battery power in this way.

Behind the curtain of these remarkable achievements lies the invaluable insights provided by the International Energy Agency (IEA) report on "Batteries and Secure Energy Transitions." This IEA report offers a comprehensive understanding of how batteries shape the future of energy. The following insights drawn from the report include the multifaceted roles of battery storage within power systems, highlighting its capacity to provide a broad range of services that enhance grid stability, reliability, and efficiency. Batteries facilitate energy transitions toward more sustainable and resilient electricity networks, from utility-scale deployments to behind-the-meter applications.

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The US Energy Information Administration recently forecasted 89% growth in US battery storage by 2024. It is increasingly recognized as a versatile and vital component within power systems, offering services that enhance grid stability, reliability, and efficiency. Whether deployed at the utility-scale or behind-the-meter, batteries demonstrate their adaptability by playing multiple roles that effectively address various challenges and opportunities within electricity networks, providing a reassuring solution to the complexities of energy management.

Battery storage can provide a broad range of services to a power system. Credit: IEA (CC BY 4.0).

Battery storage ancillary services

According to IEA, utility-scale battery storage stands out for its ability to facilitate energy shifting, a crucial application in systems with significant shares of variable renewables. By storing excess energy during periods of low demand or high renewable generation and discharging it during peak demand, utility-scale batteries help balance supply and demand, thereby optimizing grid operations. These batteries are adept at providing ancillary services such as frequency regulation, voltage control, and inertia, which are essential for maintaining grid stability. IEA explains that their fast response times make them ideal for mitigating sudden power generation or demand fluctuations, ensuring grid reliability even in the face of disruptions.

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IEA’s report mentions a couple of examples, “The 30 MW, 8 MWh Dalrymple battery project in Australia provides frequency control plus inertia and short-circuit power: this ensures a reliable power supply in the regional network, which connects high shares of variable renewables generation but lacks synchronous generation. In the United Kingdom, 869 MW of grid forming battery storage was recently awarded contracts to provide inertia and short-circuit power to the system operator in a pathfinder scheme, to procure these services via markets.”

Grid congestion management

Furthermore, IEA says these batteries can alleviate grid congestion by storing surplus renewable energy, thus minimizing the need for transmission or distribution network investment. Projects like the Dalian vanadium flow battery demonstration in China exemplify this, showcasing how large-scale batteries can enhance grid stability and efficiency by serving as additional load points.

IEA’s report states, “For example, with a 200 MW/800 MWh capacity, the Dalian vanadium flow battery demonstration project in China is designed to alleviate peak loads on the grid and serve as an additional load point for the Dalian peninsula, enhancing grid stability. The project's first phase was commissioned in 2022, and full deployment is expected to reduce peak loads by 8% from 2020 levels.”

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In regions like Germany, utility-scale batteries also play a vital role in grid management, particularly through initiatives like the grid booster program. By strategically deploying batteries to alleviate transmission bottlenecks, these projects minimize the need for costly infrastructure upgrades while enhancing grid reliability. Such endeavors highlight the importance of regulatory frameworks in enabling innovative solutions to grid challenges. In the United States, distribution system operators (DSOs) increasingly leverage storage assets to mitigate grid congestion.

Unlike in some other jurisdictions, where third-party providers are contracted for such services, DSOs directly engage with storage assets in California and New York. IEA states, “In California and New York, distribution system operators increasingly make use of storage assets which are co-owned or procured from third parties through power purchase agreements in order to reduce grid congestion, thereby avoiding or deferring expensive investment to reinforce their grids.”

Energy shifting and the provision of peaking capacity are the primary applications of utility-scale batteries installed in recent years. Credit: IEA (CC BY 4.0).

Behind-the-meter battery storage

On the other hand, behind-the-meter battery storage operates at a more localized level, often integrated with distributed renewable energy systems. These batteries offer consumers a range of benefits, from increasing self-consumption of solar energy to reducing peak demand and electricity bills through smart charging strategies. Furthermore, behind-the-meter batteries contribute to grid stability by providing backup power during outages and supporting ancillary services when aggregated into virtual power plants (VPPs).

VPPs represent a novel approach to leveraging behind-the-meter assets for grid support. By aggregating distributed energy resources—including batteries, renewables, and flexible loads—VPPs act as virtual power plants, optimizing their collective operation to meet grid needs. These aggregated systems offer flexibility and responsiveness, akin to traditional power plants, while also mitigating grid constraints at the local level.

Despite their potential, VPPs face regulatory and market barriers that impede their widespread adoption. However, initiatives like the Save on Energy Peak Perks program in Ontario demonstrate the feasibility and benefits of engaging consumers in grid support activities through VPPs. “VPPs are proving to be innovative in finding opportunities, which augurs well for the future. In Ontario, Canada, the system operator has enrolled 100K households in a VPP program, the Save on Energy Peak Perks program.”

Battery storage emerges as a cornerstone of modern power systems, offering diverse services that enhance grid resilience, efficiency, and sustainability. Whether deployed at the utility-scale or behind-the-meter, batteries play a pivotal role in enabling the transition towards a more secure and sustainable energy future. To learn more about IEA’s report, click here.