Battery Storage: The hoopla far exceeds the reality.
Steve Huntoon is the principal of Energy Counsel, LLP, www.energy-counsel.com. Mr. Huntoon is a former President of the Energy Bar Association, and has advised and represented such clients as Dynegy, PECO Energy (now part of Exelon), Florida Power & Light (NextEra Energy), ISO New England, Entergy, PacifiCorp, Williston Basin (MDU Resources), and Conectiv (PHI). The author thanks Mike Freeman, Pete Lalor and Roy Shanker for reviewing a draft of this article. All errors of commission, omission, and opinion are solely those of the author.
First came Powerwall, the home battery introduced by Elon Musk. Now comes utility-scale battery storage, touted as the next big thing for the electric grid. But as with Powerwall, the hoopla far exceeds the reality.1
The risk isn't that venture capital takes its chance and fails. That's what venture capital gets paid (or not paid) to do. The risk is that utility customer and/or taxpayer money gets committed to projects that don't make sense, and the money vanishes.2 That is what we need to guard against.3
The big payoffs for battery storage - the supposed "killer apps" - are 1) capacity and 2) energy arbitrage. Capacity would provide "back-up" to ensure resource adequacy. Energy arbitrage would involve daily cycling of storage injections and discharge to capture differences in energy prices. One could cite other potential applications, like frequency regulation or deferral of transmission/distribution expansion, but they don't rise much above niche relevance, as we'll see.