AUGUST 21 - 23, 2018 • CLEVELAND, OHIO
Energy Storage Versus Back-up 

Generation

Energy Storage Overview

NREL/PR-7A40-71839
Emma Elgqvist

Engineer, NREL Integrated Applications Center
Agenda

 Background

 Batteries 101

 Will storage work at my site?
Alcatraz PV-battery-diesel hybrid system:

• Construction completed in 2012 

• Two 220 kW diesel engine generators

• 305 kW-DC of solar photovoltaics (PV)

• 1,920 kWh of lead acid batteries

Long History of Storage and RE at Federal Sites... 

for Off-Grid Applications

 Federal agencies have a long history of 

implementing storage systems in conjunction 

with renewables, primarily at remote sites 

with high diesel costs

 Off-grid hybrid RE + storage systems lower costs and provide a sustainable alternative to 

diesel generators

 Recent reductions in li-ion battery costs are making storage systems economically 

attractive in grid-connected applications
U.S. Department of Energy, Office of Energy Efficiency and Renewable Energy, Revolution Now – Accelerating Clean Energy Deployment. DOE/EE-1478, 

September 2016. https://energy.gov/eere/downloads/revolutionnow-2016-update. 

Why Storage Now?
Battery Storage 101
PV vs. Batteries

 PV is simple

• Put it on the roof

• The sun shines

• Electricity is produced

• Your utility bill is lowered

 Batteries are more complicated

• Don’t generate electricity

• Shifts energy from one time period to another

• Install one at your site, nothing happens

 Must determine how to operate (dispatch) the battery

• Cost of energy at the time it’s stored must be cheaper than cost of 

energy when it is used 

• To maximize return on investment, must determine what 

application battery should serve and when NREL and Raytheon, perform system level testing on the Miramar 

ZnBr Flow Battery Photo by Dennis Schroeder / NREL 32582

install one of the 3,632 solar modules on NREL’s parking garage. 

The garage can produce up to 1.15 megawatts Photo by Dennis 

Schroeder / NREL 21487
Types of Energy Storage

Bulk Storage: Pumped hydro, compressed air

Pros: low cost, large capacity

Cons: long lead-time, very site specific

Technology

Distributed Storage: Fly-wheels, batteries (Flow, 

Lead, Acid, Sodium Beta, Lithium-Ion)

Pros: Siting, short lead time, use case

Cons: Cost

Lithium-ion batteries made up 98.8% of batteries 

installed in Q4 2017

Application

Distribution

Transmission

Behind-the-Meter 

(BTM) 
Power vs. Energy Capacity

• The maximum instantaneous output of the battery

• Measured in kW or MW Power

• How much energy you have available

• Measured in kWh or MWh Energy

• Ratio of power vs. energy; need to specify both

• Typical configurations include 1 MW: 2 MWh, 

equivalent to a 2 hour battery

Power:Energy

Ratio

The purpose of the battery impacts the system size and ratio
Value Streams for Storage

Service Description

Grid

Commercial

Residential

Demand charge reduction Use stored energy to reduce demand charges on utility bills ✔ ✔

Energy arbitrage Buying energy in off-peak hours, consuming during peak hours ✔ ✔

Demand response Utility programs that pay customers to lower demand during 

system peaks ✔ ✔

Capacity markets Supply spinning, non-spinning reserves (ISO/RTO) ✔ ✔

Frequency regulation Stabilize frequency on moment-to-moment basis ✔ ✔

Voltage support Insert or absorb reactive power to maintain voltage ranges on 

distribution or transmission system ✔

T&D Upgrade Deferral Deferring the need for transmission or distribution system 

upgrades, e.g. via system peak shaving ✔

Resiliency / Back-up power Using battery to sustain a critical load during grid outages ✔ ✔ ✔

Driven by Utility 

Rate Structure

Utility/Regional 

Programs

Not applicable for 

BTM storage

Value varies
Example of Demand Reduction and Energy Arbitrage

0

5

10

15

20

25

30

MW

Grid Serving Load PV Serving Load Storage Discharging PV Charging Storage Electric Load

Monday Tuesday Wednesday Thursday Friday Saturday Sunday

Demand Reduction

Setting peak for the 

month 

Energy Arbitrage

Buy cheap, sell high
Will Storage Work for Your Site?
NREL | 14

Storage Costs Incentives 

& Policies

Utility Cost & 

Consumption

Ancillary 

Services Markets

Will Storage Work for 

Your Site?

Resilience 

Goals
Current Battery Cost Trends and Estimates

 Wide range of storage costs reported due to 

rapid cost reduction in a relatively new 

technology

 Some costs are reported for battery cell-only 

(not accounting for pack or total installed cost)

 Normalizing to $/kW or $/kWh can be 

misleading when power:energy ratio is not 

considered

Battery Energy Storage Market: Commercial Scale, Lithium-ion Projects in the U.S. 

https://www.nrel.gov/docs/fy17osti/67235.pdf

Reported costs from SGIP show range & decline
Federal Investment Tax Credit (ITC) for storage: Lowers the cost of storage when coupled with RE

State incentives for storage: state incentives, like the CA SGIP, can significantly accelerate the 

deployment of storage

State net metering policies: in states with net metering policies, storage can be less impactful

Incentives for Storage

Federal Tax Incentives for Energy Storage System https://www.nrel.gov/docs/fy18osti/70384.pdf
Electricity Bill Structure

Identifying Potential Markets for Behind-the-Meter Battery Energy Storage: A Survey 

of U.S. Demand Charges https://www.nrel.gov/docs/fy17osti/68963.pdf

Electricity Bill 

Component

How It’s Billed How Storage Can Help

Energy 

Charges

Amount of kWh 

consumed (can 

vary by time of 

use [TOU])

Shift usage from high TOU 

periods to low TOU period

Demand 

Charges

Based on highest 

demand (kW) of 

the month

Reduce peak demand when 

dispatched during peak 

period 

Fixed Charges Fixed cost per 

month

Storage cannot offset these

Other types of charges include:

• Minimum charge

• Departing load charge

• Standby charge

Number of commercial customers who can subscribe to 

tariffs with demand charges over $15/kW
Demand Response & Ancillary Service Markets

 Demand Response Programs offered by certain utility 

providers compensate customers for lowering demand (by 

discharging battery systems) at certain times

 Capacity Markets regional programs (RTO/ISO) 

compensate battery systems for delivering energy when 

dispatched

 Frequency Regulation Markets (regulation-up and 

regulation-down) compensate battery system owners for 

responding to automatic control signals

Participation in these programs doesn’t always align with utility bill reduction opportunities 

In addition to directly lowering their utility bill through peak shaving and energy arbitrage, 

battery storage system owners can be compensated through utility or regional programs for 

providing a service
Incorporating Storage and RE for Resilience

Generator Solar PV Storage Lifecycle Cost Outage

1. Base case 2.5 MW - - $20 million 5 days

2. Lowest cost solution 2.5 MW 625 kW 175 kWh $19.5 million 6 days

3. Proposed system 2.5 MW 2 MW 500 kWh $20.1 million 9 days

0%

20%

40%

60%

80%

100%

1 2 3 4 5 6 7 8 9 10 11 12 13 14

Probability of Surviving Outage 

[%]

Length of Outage [Days]

K. Anderson et al., “Increasing Resiliency Through Renewable Energy Microgrids”. SCTE Journal of Energy 

Management Vol.2 (2) August 2017 pp.22-38. https://www.nrel.gov/docs/fy17osti/69034.pdf

In some cases, RE + storage can contribute to resilience goals and provide cost savings
Thank You!

Emma Elgqvist

emma.elgqvist@nrel.gov

This work was authored by the National Renewable Energy Laboratory, operated by Alliance for Sustainable Energy, LLC, for the U.S. Department of Energy (DOE) under Contract No. DE-AC36-08GO28308. 

Funding provided the U.S. Department of Energy Office of Energy Efficiency and Renewable Energy Federal Energy Management Program. The views expressed in the presentation do not necessarily represent 

the views of the DOE or the U.S. Government. The U.S. Government retains and the publisher, by accepting the presentation for publication, acknowledges that the U.S. Government retains a nonexclusive, paidup, irrevocable, worldwide license to publish or reproduce the published form of this work, or allow others to do so, for U.S. Government purposes.