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Energy Storage: What It is and How It Can Help Your Company

What is energy storage?

Energy storage allows buildings to lower their demand from the grid during peak times. It helps keep prices low by allowing distributors to purchase electricity during off-peak times and then sell it when demand spikes. Energy storage also provides resilience because it serves as a backup supply of energy if power generation is interrupted.

What are the different methods of energy storage?

There are many ways of storing energy, including: pumped-storage hydropower, batteries, hydrogen fuel cells, and electric vehicles.

Why is energy storage useful for companies?

Energy storage allows you to utilize the renewable resources available to you, even if they are intermittent. Also, the cost of energy storage has decreased dramatically since the 2010s.

What are the cons of energy storage?

Energy can be lost in “round trip” inefficiencies as it is stored and used, energy storage can be costly depending on the method, and additional infrastructure and space are required, which can destroy natural habitats and land in some places.

As the world deals with the effects of climate change, many scientists and policymakers are warning about the consequences of the long term, continued use of fossil fuels. To encourage the use of renewable resources like hydro-electric, solar, and wind, engineers are turning their attention to energy storage. Energy storage, which is on track to replace peaker plants, helps to solve the main problem with wind and solar power sources – that they are intermittent and therefore, not as reliable. Additionally, energy storage can respond to fluctuations in energy demand, which makes grids more responsive and reduces the necessity for backup (greenhouse gas emissions emitting) power plants. In this article, we’ll define what, exactly, energy storage is, what the different types of energy storage are, how energy storage can benefit your company, the potential drawbacks of energy storage, and finally, how to manage your energy storage.

What is Energy Storage, Anyway?

Energy storage is not a new technology. Batteries have been around since the beginning of the 19th century, and the United States began using pumped-storage hydropower in the 1920s. However, today, more consumers, governments, and climate activists are pushing for widespread, clean energy use. As a result, energy storage projects have increased exponentially and led to new and improved energy storage solutions.

All the fossil fuels that we know and use (coal, oil, natural gas) are already in stored form. When we need energy, we burn the fuel. When we don’t need it, it sits in tanks, drums, and storage bins. However, solar and wind-generated energy is not always available in nature since it relies on weather conditions (i.e. extended periods of sunshine and wind). Solar power may decrease in availability when winter storms come, whereas wind power may be affected on calm summer days. Because renewables have become increasingly popular, and demand for them is only likely to increase, there is a rising interest in systems that can store clean energy.

Energy storage allows buildings to lower their demand from the grid during peak times, e.g. hot summer days when air conditioners are on or in the evening when more lights are turned on. You may have noticed that your electricity becomes more expensive during peak times – this is because power plants must increase their production to accommodate the rising demand for energy. Energy storage helps keep prices low by allowing distributors to purchase electricity during off-peak times (when energy is cheap) and then sell it when demand spikes.

With the recent energy shortage crisis in California, elected officials have become increasingly aware of the necessity of grid resilience. Energy storage provides resilience because it serves as a backup supply of energy if power generation is interrupted.

What are the Different Methods of Energy Storage?

There are myriad ways of storing energy, and each has its drawbacks and advantages. Here, we’ll be exploring eight different methods of energy storage (nine if one counts the storage potential of electric cars) that provide storage capacities of at least 20 MW. These methods are best for companies or property portfolios with large energy demands. Read more about them below.

Pumped-Storage Hydropower

Pumped-storage hydropower (PSH) is far and away the most popular method of energy storage in the U.S. – it makes up 95 percent of utility-scale storage. According to the U.S. Department of Energy (DOE), pumped-storage hydropower has increased by 2 gigawatts (GW) in the past 10 years.

PSH facilities are large-scale energy storage plants where gravity is employed to generate electricity. During periods of high wind and solar generation, water is pumped to a higher elevation pool for storage. When electricity demand rises and wind and solar cannot meet the demand, water is sent back to a lower pool, generating power through turbines as it runs downhill. PSH facilities now have the ability to adjust speeds (which makes them more responsive to the demands of the grid) and operate in closed-loop systems. A closed loop PSH does not need to be connected to a constant source of flowing water. This makes it an option for more arid locations.

A benefit of PSH is that it can be cheaper than other storage methods, especially when it comes to extremely large capacity storage. According to the Electric Power Research Institute, the installation cost for pumped-storage hydropower varies between $1,700 and $5,100/kW, whereas lithium-ion batteries (discussed below) cost from $2,500/kW to 3,900/kW. PSH is more than 80 percent energy efficient through a full cycle, and can provide an average of 10 hours of electricity (lithium-ion batteries only provide about six). However, PSH projects are long-term investments since the permitting and construction required can take anywhere from three to five years. This sometimes make investors balk – they prefer shorter-term investments, especially in the volatile pandemic-era energy market.

Compressed Air Energy Storage (CAES)

Compressed air storage involves pumping air into a hole underground (usually a salt cavern) during off-peak hours. When need for energy increases, the air from the underground cave is released back up into the facility (similar to how water is released in PSH) where it is heated. The expansion of the hot air turns an electricity generator. While this process often uses natural gas, CAES has the ability to triple the energy output of facilities using natural gas. CAES can achieve around 70 percent energy efficiency when the heat from the pressurized air is conserved.


At thermal facilities, temperature is used to store energy. Rocks, salt, water, and/or other materials are heated, then kept in insulated areas. When energy is needed, thermal energy is disseminated via cold water pumped onto the hot material. The resulting steam spins turbines. Additionally, thermal energy storage can be used in the heating and cooling of buildings, and its efficiency usually ranges from 50 to 90 percent.


By December 2017, approximately 708 MW of large-scale battery storage was in operation in the U.S. energy grid. Much of the storage is operated by organizations tasked with balancing the power grid, like Independent System Operators (ISOs) and Regional Transmission Organizations (RTOs). ISOs and RTOs are independent, federally regulated non-profits that control regional electricity pricing and distribution.

PJM, a regional transmission organization located in 13 eastern states (including Pennsylvania, New York, Ohio, and Illinois), contains the greatest amount of large-scale battery installations. The second largest large-scale battery capacity belongs to California’s ISO (CAISO). Most battery storage projects developed by ISOs and RTOs are for short-term energy storage. They use lithium-ion batteries, which furnish enough energy to supply a local grid for an average of four hours. Such facilities are useful for ensuring grid reliability, integrating renewables into grids, and relieving grids during peak hours. See the following summaries of battery types for more information.

1. Lithium-ion

Lithium-ion batteries were first produced commercially in the 90s, when they were originally used for small-scale consumer products (like cellphone). However, as of late, they are being used for larger-scale battery storage and electric vehicles. Lithium batteries have a life cycle of 10-15 years, and Bloomberg New Energy Finance predicts that lithium-ion batteries will fall to a low price of less than $100 kWh by 2025.

Lithium-ion batteries are now the most popular storage option today, making up over 90 percent of the worldwide battery storage market. Lithium-ion batteries have the advantage of high energy density and lightweight design. Additionally, it is possible to pair them with solar panels to allow households and businesses to use small amounts of electricity for charging cell phones, operating appliances, and lighting buildings.

General Electric designed 1 MW lithium-ion battery containers that became available for purchase in 2019, making transport of the batteries easy and providing renewable energy facilities with smaller, more versatile storage options.

2. Flow

Flow batteries serve as an alternative option to lithium-ion batteries. They have been used for many projects that required longer storage durations, since they have low energy densities, long life cycles, and are appropriate for providing continuous power.

3. Solid State

Compared to the popular lithium-ion battery, solid state batteries have many advantages when it comes to large-scale grid energy storage. As suggested by the name, solid-state batteries feature solid electrolytes. Unlike the liquid electrolytes in lithium-ion batteries, solid electrolytes have a higher energy density and are much less flammable (always a comforting fact.) Because of their heightened safety, solid-state batteries are ideal for large-scale grid applications.

That being said, solid state batteries cost more than lithium-ion batteries. Because production of lithium-ion technology is happening at such a fast clip compared to solid state technology, prices for the former are currently much lower.

Hydrogen Fuel Cells

The hydrogen fuel cell generates electricity via combining hydrogen and oxygen. The cells have several major appeals: since they don’t rely on moving parts, they are dependable and silent; they have a small carbon footprint (their only emission is good old H2O); and they possess a high energy density. It is also possible for the production process to be reversed, which is where energy storage comes in. Since electrolysis of water produces oxygen and hydrogen, fuel cell facilities can produce hydrogen when electricity prices are low and then use said hydrogen to create electricity to meet demands. The issue with fuel cells is their hefty price – in order to run, they require platinum, which is a costly element.


While not appropriate for long-term storage, flywheels can be extremely useful for both load-leveling and shifting. Flywheels have a long-life cycle, high-energy density, low cost of maintenance, and fairly rapid response speeds. In the flywheel process, motors store energy in the flywheels by spinning them at immensely fast rates (up to 50,000 rpm). The motor then reverses, generating electricity from the stored kinetic energy.

Electric Vehicles

As electric vehicles (EVs) become more widespread, there is a rising interest in using them for back-up storage if the grid fails or demand spikes. While most EVs today are not designed to supply energy back into the grid, vehicle-to-grid (V2G) cars are capable of storing electricity in car batteries and then transferring it back into the grid at a later date. Even when the car itself retires from the road, EV batteries can still be used in grid storage. Utilities have begun using the batteries from retired EVs as second-hand energy storage – imagine your local thrift store, but with car batteries instead of old clothes. Helpfully, these batteries have the ability to store electricity for up to a decade.

Why is Energy Storage Useful for Your Company?

At this point you may be thinking, “Energy storage sounds great, but what does it have to do with me and my company?” For starters, one of the most important use cases for energy storage is the ability to switch to stored power when the grid peaks. As mentioned above, batteries charge while the grid is at its base load, or minimum level of demand, and electricity prices are low. Then, this charged power is used by your building during peak hours, allowing you to avoid purchasing energy when prices are high. Next, if you use, or are thinking about using, electric powered vehicles to service your company, storage is essential: a car cannot be charged overnight by solar energy without a storage system. Third, clean energy use is quickly becoming a major requirement of clients and investors alike. Energy storage allows you to utilize the renewable resources available to you, even if they are intermittent. Finally, the cost of energy storage has decreased dramatically since the 2010s. (We can credit most of the price decrease to the falling costs of lithium-ion batteries). This means that energy storage is likely to be cost-effective for your company. Meanwhile, the performance and quality of energy storage methods continues to improve.

Are There any Cons to Energy Storage?

Although there are many benefits to energy storage, it is not without its weaknesses: energy can be lost in “round trip” inefficiencies as it is stored and used, energy storage can be costly depending on the method, and additional infrastructure and space are required, which can destroy natural habitats and land in some places.

When it comes to batteries, safety is another concern. The aforementioned lithium-ion batteries come in a variety of chemistries, but are more flammable than solid state batteries. That being said, it is possible for any battery to become harmful if neglected. For example, lithium-ion batteries can go into thermal runaway. In thermal runaway, the battery ignites, causing it to get hotter and become extremely difficult to put out. Not only is this dangerous, it is certain to cause complete failure of the battery. There are three ways of thermal runaway can occur: The battery suffers some sort of impact damage, is exposed to an external source of heat, or is overcharged. Lead acid batteries, meanwhile, are composed of sulphuric acid. This is a corrosive and dangerous substance to come into contact with. Thus, take care to place the batteries where they will not leak.

How EnergyWatch Can Help

If you have invested in an energy storage project, especially one that includes on-site generation, acquiring data on the project’s efficacy is important.  With EnergyWatch’s energy management platform, Watchwire, you will have: full visibility into the generation and storage levels, allowing you to analyze against your current usage and demand; peak load alerts that make it possible for you to know when to initiate your energy storage use to limit your demand from the grid; and analysis of your energy storage project and measurement & verification once it’s implemented, allowing you to determine how effective your project has been in improving operations at your company. To learn more about how Watchwire can help in your energy storage projects, download the full solution brief.