Electricity Storage

This academically reviewed FactBook by the A.T. Kearney Energy Transition Institute, “Electricity Storage,” captures the status of storage technologies and future developments in electricity storage. It details the main technological hurdles and areas for research and development, as well as analyzes the economics of a range of technologies.

This FactBook is one of a series of academically reviewed FactBooks on energy sources and technologies published by the A.T. Kearney Energy Transition Institute, a non-profit energy transition research organization established in 2011. This publication seeks to provide stakeholders with a balanced, unbiased assessment of electricity storage technologies and developments.

Integrating intermittent sources of energy requires additional flexibility resources and gives new momentum to electricity-storage solutions


Power systems are challenging to operate, since supply and demand must be precisely balanced at all times. By storing primary energy sources, such as coal and gas, or water in hydro dams, system operators have avoided the need to store electricity. But wind and solar photovoltaic systems make demand–supply matching more difficult since they increase the need for flexibility within the system, but do not themselves contribute significantly to flexibility. The increased need for flexibility is reflected in residual load variations (demand minus intermittent output).

Flexibility management can be optimized by perfecting models for forecasting output from wind and solar plants, fine-tuning market regulations, and refining the design of power systems. But additional flexibility will be needed in the form of demand-side participation, better connections between markets, greater flexibility in base-load power supply, and electricity storage.

Electricity storage is a three-step process that involves withdrawing electricity from the grid, storing it, and returning it at a later stage. It consists of two dimensions: the power capacity of the charging and discharging phases, which is the ability of the storage system to withdraw or inject electricity instantaneously from or into the grid; and the energy capacity of the storing phase, which measures how much energy can be stored and for how long. As a consequence, electricity storage has very different uses, depending on the combination of the power rating and discharge time of a device, its location within the grid, and its response time.

The primary purpose of electricity storage consists of ensuring power quality and reliability of supply, whether it is to provide operating reserves, uninterrupted power-supply solutions to end-users, or initial power to restart the grid after a blackout. A secondary purpose of electricity storage is driven more by energy requirements. This involves leveling the load—storing power in times of excess supply and discharging it in times of deficit. Leveling enables the deferral of grid investment on a congestion node and optimal utilization of low-operating-cost power plants, and presents opportunities for price arbitrage. The increased penetration of variable renewables is making these applications more critical. It is also creating a new application, known as intermittent balancing, to firm their output or avoid curtailment. For these reasons, variable renewables have resulted in renewed interest in electricity storage.


The features of storage technologies must match application requirements


The underlying physical features of technologies determine their advantages and drawbacks. Many storage technologies have been developed in recent decades that rely on mechanical, electrochemical, thermal, electrical, or chemical energy. The applications electricity storage technologies are able to fulfill depend on their chemical and physical characteristics. Technologies must be assessed at the application level, taking into account power rating, storage duration, frequency of charge and discharge, efficiency and response time, and site constraints that determine power and energy density requirements.

In general, pumped hydro storage (PHS) and compressed-air energy storage (CAES) are the most suitable for bulk storage applications.

Batteries are a major component of the storage landscape and can serve a wide range of applications with intermediate power and energy requirements. They differ according to electrode type and electrolyte chemistry: sodium-sulfur (NaS) and lithium-ion (Li-ion) are the most suited for stationary storage because of their higher power and energy densities, and greater durability. Nevertheless, durability remains—together with costs and safety concerns—one of the biggest hurdles to commercial development.

For applications where providing power in short bursts is the priority, flywheel, superconducting magnetic energy storage (SMES), and supercapacitors appear to be the most attractive, as a result of their high power density, high efficiency, high response time, and long lifespan. However, costs are high, and these technologies are currently at the demonstration phase.

Finally, despite its poor overall efficiency and high up-front capital costs, chemical storage seems to be the only way to provide the very large-scale and long-term storage requirements that could result from a power mix generated primarily by variable renewables. Chemical storage consists of converting electricity into hydrogen by means of water electrolysis. It actually goes far beyond electricity storage since hydrogen can also be converted into synthetic natural gas, used directly as a fuel in the transportation sector, or used as feedstock in the chemicals industry.

Electricity storage technologies are at very different levels of maturity, but many face significant risk and extensive capital requirements. Most storage technologies are currently clustered in the investment “valley of death”—the demonstration or early deployment phases—when capital requirements and risks are at their highest.


Electricity storage is not a new concept, but interest in this storage is increasing


With the exception of pumped hydro storage, the deployment of electricity storage is at an embryonic stage. As of November 2017, the installed power capacity of electricity-storage plants amounted to around 175 GW. However, development has been restricted almost exclusively to one technology: pumped hydro storage. Development of pumped hydro storage started in the 1960s, and the technology accounts for 96% of global installed capacity. China, the United States, and Japan host the largest amount of pumped hydro storage capacity, with 19%, 17%, and 17% of global operating capacity, respectively. Most of the future growth in pumped hydro storage will be driven by the US (48% of the future storage projects).

The first compressed-air energy storage plant, a 290 MW facility in Germany, was commissioned in 1978. The second, a 110 MW plant in the US, was not built until 1991. A few small-scale demonstration plants have been constructed in recent years and some are under construction in North America, as well as a smaller number in Europe, to test advanced or new concepts. However, the outlook is uncertain, given that several other compressed-air projects have been suspended in South Korea and the US, including a 2,700 MW venture in Norton, Ohio and the 317 MW Apex Bethnel in Texas.

Battery projects are being developed at a rapid pace globally and the total operational capacity (all battery types) amounts to around 1.5 GW. Driven by developments in the US, lithium-ion batteries have recently become dominant, accounting for more than 77% of operational battery capacities (1147 MW) and 80% of planned projects. Sodium-sulfur batteries, which were the dominant technology in the early 2000s, seem to be losing momentum. They account for less than 13% of stationary batteries installed (188 MW). Although at a very early phase of deployment, with few projects announced, flow batteries could be a game changer in the medium term.

Thermal storage has developed in recent years in conjunction with concentrating solar power plants and operational capacity has now reached around 2.7 GW, primarily in the form of molten salt. Thermal storage is therefore the dominant source of electricity storage (excluding pumped hydro), beyond Li-ion batteries and flywheels. Despite the recent increase in the projects being commissioned, flywheels struggle to find a sustainable value proposition; electrical storage technologies, either supercapacitors or superconducting magnetic energy storage, remain at an early phase of demonstration.


Research, development, & demonstration is making inroads into solving technological obstacles


For pumped hydro storage, the primary objectives are addressing the constraint of site availability and minimizing environmental impact by using sea-based or underground reservoirs. As a significant proportion of pumped hydro capacity is ageing and not designed to help balance variable renewables, RD&D is also being directed at upgrading existing plants and increasing their flexibility (using variable-speed turbines, for instance).

Several compressed-air energy-storage concepts, which should become more efficient by reducing or avoiding gas use, are also in development. Adiabatic compressed air involves the storage of waste heat from the air-compression process and its use to heat up the air during expansion. The isothermal design, meanwhile, aims to maintain a constant temperature. Several large-scale demonstration projects are planned or under development.

Battery research is focused on new materials and chemical compositions that would increase lifespan, enhance energy density, and mitigate safety and environmental issues. For instance, lower-cost materials for the negative electrode of the lithium-ion battery are being tested, as are organic solutions to replace the water-based electrolytes of flow batteries. Liquid-air and liquid-metal concepts that use oxygen from the air instead of storing an oxidizing agent internally are often considered potentially disruptive, but their commercial prospects remain uncertain.

RD&D of hydrogen-based technologies is highly active. Current efforts are focused on improving the viability of water electrolysis (by reducing the capital costs of proton exchange membranes and increasing efficiency through the use of high-temperature concepts); assessing the suitability of blending hydrogen with gas; developing methods of using hydrogen to manufacture synthetic fuels; and continuing to investigate hydrogen storage in the form of metal hydrides and in underground formations.


Business cases for electricity storage are highly complex and rarely viable under current market conditions and existing regulatory frameworks


Initial investment in a storage facility comprises two principal components: a cost per unit of power (in $/kW) and a cost per unit of energy capacity (in $/kWh). These costs vary significantly according to the technology being deployed.

The combination of power rating and energy capacity is therefore crucial in assessing the competitiveness of different technologies. Applications dictate another major component of storage economics: the frequency of charging and discharging cycles. Cycling affects the amortization of capital costs and annual replacement costs, which have significant impacts on battery economics.

The price of electricity is equivalent to fuel cost. Consequently, electricity-price distribution—depicted by the location-dependent price-duration curve—is a key factor in storage economics. Usually, storage operators try to take advantage of electricity price spreads (charging when the price is low and discharging when it is high), but this is not possible in all applications.

The economics of electricity storage remain shaky. Costs tend to outweigh the financial benefits, although price arbitrage and grid-investment deferral may make investments in storage profitable in some countries. Bundling several storage applications together seems a strong lever in helping electricity storage to become profitable. Recent projects in the United States highlight that utilities-scale projects can be economical but small-scale (commercial/residential) projects remain uneconomic. Removing regulatory barriers, such as making storage plants eligible to participate in ancillary services, rewarding fast response assets, or allowing network operators to own storage facilities, is also required to enable the monetization of storage.


Environmental and social impacts vary according to the technology and might hinder development in some cases


Assessing the environmental impact of electricity storage requires consideration of several aspects, such as direct and localized impacts, which vary according to the technology used, as well as the impact of the generation source, electricity displaced upon discharging, and the increase in generation needed to balance storage energy losses.

Pumped hydro storage faces the greatest environmental problems. Due to its low energy density—1 cubic meter of water over a height of 100 meters gives 0.27 kWh of potential energy—requirements for land and water are high.

Compressed air energy storage uses very little land but is the only technology that directly emits greenhouse gases. That said, emissions are very low (equivalent to roughly one-third of those of conventional gas turbines) and have been reduced in newer plants where exhaust gas is used to heat up the air. Moreover, emissions will be avoided in adiabatic and isothermal plants. Compressed-air energy storage also has high water requirements for the formation of underground salt caverns and for cooling during operation.

There are concerns over the energy intensity of batteries. According to a recent Stanford University study, over their lifetime, batteries store only two to 10 times the energy needed to build and operate them. This compares with ratios higher than 200 for pumped hydro storage and compressed-air energy storage. The relatively low ratio for batteries results from their life cycle and the materials of which they are made, underlining the need for continuing research to improve durability and investigate new materials. Important safety issues that could compromise public acceptance must be addressed in the case of batteries and hydrogen solutions.

Finally, better communication and education are needed to improve the understanding of electricity storage among energy professionals, policy makers, students, and the general public.




Electricity storage is an essential technology of the energy transition. Considering the electrification trend in many sectors and the growth of decentralized energy solutions, the demand for electricity storage will only grow, at least over the next decade. Nevertheless, electricity storage solutions still need to demonstrate commercial viability on various segments, scales, and applications. And bubbling innovations promise interesting solutions ahead.


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