How Does Energy Storage Help The Grid?

Residential energy storage solutions have the potential to greatly assist the grid. With limited space and high energy demand, it is a very valuable tool in countries where there is a scarcity of space. Depending on the location, storage may be installed in existing boiler spaces or home spaces. Not every home, however, will have the space to accommodate storage devices, so collaborative efforts will be necessary. In Spain, for example, solar communities have sprung up, where members share electricity produced by solar panels installed on roofs. Battery-based solutions are another great opportunity to engage with the grid.

How residential energy storage could help the power grid?

When there is high demand for electricity, residential energy storage solutions can help the grid balance its supply. It can also help with voltage and frequency regulation. Moreover, energy storage reduces congestion and costs, and it allows grid operators to postpone investments in transmission and distribution. In rural communities, energy storage is particularly useful because it can reduce the risk of blackouts. It also offers benefits for communities with low-income households, and for communities impacted by climate change and pollution.

Energy storage solutions also aid the grid by providing backup power in times of disruptions. They can provide power for entire buildings or the grid at a moment’s notice. This gives the grid flexibility, which is crucial for reliability and resilience. Whether a disruption occurs during peak energy hours or a storm, energy storage can help maintain the power grid.

Increasing numbers of households are adding residential energy storage solutions to their homes to reduce their utility bills and improve reliability. Increasing government incentives and falling technology costs are encouraging the growth of residential energy storage systems. Additionally, neighborhood battery density is likely to increase as more residential energy storage systems are installed. By 2025, there is a projected increase of 7,000 megawatts of distributed energy storage in the U.S.

Homeowners are increasingly using battery storage to provide backup power during power outages. These systems work alongside solar PV arrays and help homeowners stay online even when power is interrupted. The stored energy can power an entire house, support secure loads, or prioritize critical appliances.

Graph representing the growth of residential energy storage

A new report predicts that energy storage installations worldwide will increase by a factor of 122 from 2018 to 2030. By 2030, there will be over 345 gigawatt-hours of energy storage installed globally. This is nearly the same amount of energy that Japan generated in 2020. China will account for more than half of this growth, with increased renewable integration rules fuelling growth. Other major markets include the U.S., Australia, Germany, and China.

While direct support remains a major driver, increased focus on developing markets for storage services is essential. As storage grows in popularity, it is diversifying into new markets and applications. In California and Australia, for example, consumer-led deployment is fueled by resilience and prosumerism. Regulations will need to evolve to reflect these new functions and markets.

By 2030, Asia-Pacific and the Americas will lead the way in new installations, while Europe, the Middle East, and Africa will lag behind. However, the region’s population explosion, increasing economic growth, and rapid urbanization will spur demand for residential energy storage. In addition, frequent power outages are driving market growth in Asia-Pacific countries. Moreover, government agencies are working closely together to provide electricity in these regions.

Looking ahead: Increasing the value of residential energy storage

As the demand for electric vehicles grows, residential energy storage systems are likely to gain more traction. In addition to reducing carbon emissions, these solutions provide an uninterrupted power supply and can eliminate transmission and distribution bottlenecks. However, they require a significant capital investment and must be properly disposed of.

The cost of residential energy storage systems can be estimated using two different methodologies. One of them looks at the cost of the storage components, while the other looks at the charging costs. The latter is known as the Levelized Cost approach. In both approaches, the main objective is to reduce the overall cost.

The levelized cost of electricity (LCOE), or levelized cost of energy, is a measure of the average net present cost of electricity generation for a generator over its lifetime. It is used for investment planning and to compare different methods of electricity generation on a consistent basis.

A recent study found that more than 20 percent of US households are interested in installing residential energy-storage systems. As battery prices come down and installers gain experience, the market is projected to expand significantly. By 2023, annual residential energy-storage installations are expected to reach two billion kilowatt-hours.

The market potential method extends the system-value literature to provide decision-makers with signals in complex competition scenarios. It also avoids assigning monetary values to individual energy storage units. Instead, it looks at the potential value of the storage when a specified quantity of it is built. This metric could help guide the future development of residential energy storage solutions.