Battery Storage in the United 

States: An Update on Market 

Trends

July 2020

Independent Statistics & Analysis

www.eia.gov

U.S. Department of Energy

Washington, DC 20585
U.S. Energy Information Administration | US. Battery Storage Market Trends i

This report was prepared by the U.S. Energy Information Administration (EIA), the statistical and 

analytical agency within the U.S. Department of Energy. By law, EIA’s data, analyses, and forecasts are 

independent of approval by any other officer or employee of the United States Government. The views 

in this report therefore should not be construed as representing those of the U.S. Department of Energy 

or other federal agencies.
U.S. Energy Information Administration | US. Battery Storage Market Trends ii

List of Acronyms 

AEO Annual Energy Outlook

AK/HI Alaska and Hawaii

CAES Compressed-Air Energy Storage

CAISO California Independent System Operator

CPUC California Public Utility Commission

CSP Concentrated Solar Power

DOE U.S. Department of Energy

EIA U.S. Energy Information Administration

ERCOT Electric Reliability Council of Texas

FERC Federal Energy Regulatory Commission 

GW Gigawatt

IOU Investor-owned utilities

ITC Investment tax credit

IPP Independent power producer

IRP Integrated resource plan

ISO-NE Independent System Operator of New England

kW Kilowatt

kWh Kilowatthour

LADWP Los Angeles Department of Water and Power

MISO Mid-Continent Independent System Operator

MW Megawatt

MWh Megawatthour

PGE Pacific Gas and Electric

PJM PJM Interconnection

PPA Power purchase agreement

SCE Southern California Edison

SDGE San Diego Gas and Electric

SGIP Self-Generation Incentive Program

SMUD Sacramento Municipal Utility District
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Table of Contents

List of Acronyms............................................................................................................................................ ii

List of Figures............................................................................................................................................... iv

Executive Summary.......................................................................................................................................5

Introduction ..................................................................................................................................................8

Large-Scale Battery Storage Trends..............................................................................................................9

Regional Trends.......................................................................................................................................9

Ownership Trends..................................................................................................................................12

Chemistry Trends...................................................................................................................................13

Chemistry Descriptions...................................................................................................................13

Chemistry Trends ............................................................................................................................14

Current Applications...................................................................................................................................15

Application Descriptions .................................................................................................................15

Applications by Region....................................................................................................................16

Battery Storage Costs..................................................................................................................................17

Cost Background .............................................................................................................................17

Cost Results.....................................................................................................................................18

Other Cost Metrics..........................................................................................................................20

Small-Scale Energy Storage Trends.............................................................................................................21

Small-Scale Energy Storage Trends in California.............................................................................21

Small-Scale Energy Storage Trends in the Rest of the United States..............................................22

Market and Policy Drivers...........................................................................................................................23

Wholesale Market Rules........................................................................................................................23

State-Level Policy Actions......................................................................................................................24

Policy Actions in California ..............................................................................................................24

Policy Actions in the Rest of the United States...............................................................................24

Future Trends..............................................................................................................................................26

Near-Term Planned Capacity Additions (2020–23) ...............................................................................26

Co-Located Battery Storage Projects.....................................................................................................26

Long-Term Projected Capacity Additions (2020–2050).........................................................................28

Appendix A: Other Storage Technologies...................................................................................................31
U.S. Energy Information Administration | US. Battery Storage Market Trends iv

List of Figures

Figure 1. Large-scale power and energy capacity by region (2018) .............................................................9

Figure 2 Large-scale battery storage installations by region (2018)...........................................................10

Figure 3. Large-scale battery storage capacity by region (2003–2018)......................................................11

Figure 4. Power capacity and duration of large-scale battery storage by region (2018) ...........................12

Figure 5. Large-scale battery storage capacity by region and ownership type (2018)...............................12

Figure 6. Large-scale battery storage capacity by chemistry (2003–2018) ................................................14

Figure 7. Applications served by large-scale battery storage (2018)..........................................................16

Figure 8. Total installed cost of large-scale battery storage systems by duration (2013 -2017)................18

Figure 9. Total installed cost of large-scale battery storage systems by year............................................19

Figure 10. Small-scale energy storage capacity by sector (2018)...............................................................21

Figure 11. Small-scale energy storage capacity outside of California by sector (2018) .............................22

Figure 12. Large-scale battery storage cumulative power capacity (2010–2023)......................................26

Figure 13. Count and capacity of renewable plus storage facilities (2011–2023)......................................27

Figure 14. Operating and planned renewable plus storage capacity, top 10 states..................................28

Figure 15. AEO2020 power capacity by case and selected technology, 2050............................................29

Figure 16. AEO2020 regional diurnal storage versus solar photovoltaic power and wind capacity, 2050 30

Figure 17. Hydroelectric pumped storage capacity (1960–2018)...............................................................31
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U.S. Energy Information Administration | US. Battery Storage Market Trends 5

Executive Summary

Large-scale battery storage systems are increasingly being used across the power grid in the United 

States. In 2010, 7 battery storage systems accounted for only 59 megawatts (MW) of power capacity, 

the maximum amount of power output a battery can provide in any instant, in the United States. By 

2015, 49 systems accounted for 351 MW of power capacity. This growth continued at an increased rate 

for the next three years, and the total number of operational battery storage systems has more than 

doubled to 125 for a total of 869 MW of installed power capacity as of the end of 2018.

This report explores trends in battery storage capacity additions in the United States and describes the 

state of the market as of 2018, including information on applications, cost, ongoing trends, and market 

and policy drivers. These observations consider both power capacity and energy capacity, the total 

amount of energy that can be stored by a battery system. Some key observations are as follows:

At the end of 2018, 869 megawatts (MW) of power capacity,1representing 1,236 megawatthours (MWh) 

of energy capacity,2 of large-scale3 battery storage was in operation in the United States. 

 Over 90% of large-scale battery storage power capacity in the United States was provided by 

batteries based on lithium-ion chemistries.

 About 73% of large-scale battery storage power capacity in the Unites States, representing 70% 

of energy capacity, was installed in states covered by independent system operators (ISOs) or 

regional transmission organizations (RTOs).

 Alaska and Hawaii, with comparatively smaller electrical systems that account for 1% of total 

grid capacity in the United States, accounted for 12% of the power capacity in 2018, or 14% of 

large-scale battery energy capacity.

 Historically, the majority of annual battery installations have occurred within the PJM 

Interconnection (PJM), which manages energy and capacity markets and the transmission grid in 

13 eastern and Midwestern states and the District of Columbia, and California Independent 

System Operator (CAISO) territories. However, in 2018, over 58% (130 MW) of power capacity

additions, representing 69% (337 MWh) of energy capacity additions, were installed in states 

outside of those areas. 

 

1 As the maximum instantaneous amount of power output, power capacity is measured in units such as megawatts (MW)

2 As the total amount of energy that can be stored or discharged by a battery storage system, energy capacity is measured in 

megawatt-hours (MWh)

3 Large-scale refers to systems that are grid connected and have a nameplate power capacity greater than 1 MW.
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Figure ES1. Large-scale battery storage capacity by region (2010–2018)

power capacity energy capacity

megawatts megawatthours

Sources: U.S. Energy Information Administration, Form EIA-860M, Preliminary Monthly Electric Generator Inventory; U.S. Energy 

Information Administration, Form EIA-860, Annual Electric Generator Report

Approximately one third (32%) of large-scale battery storage power capacity (and 14% of energy 

capacity) in the United States in 2018 was installed in PJM. 

 In 2012, PJM created a new frequency regulation market product for fast-responding resources, 

the conditions of which were favorable for battery storage. However, changes implemented in 

2017 in PJM’s market rules have reduced the number of battery installations in the region.

 Most existing large-scale battery storage power capacity in PJM is owned by independent power 

producers (IPPs) providing power-oriented frequency regulation services. 

Installations in CAISO accounted for 21% of existing large-scale battery storage power capacity in the 

United States in 2018, but they accounted for 41% of existing energy capacity. 

 In 2013, the California Public Utility Commission (CPUC) implemented Assembly Bill 2514 by 

mandating that the state’s investor-owned utilities procure 1,325 MW of energy storage by 

2020. 

 Large-scale installations in California tend to provide energy-oriented services and tend to serve 

a wider array of applications than systems in PJM.

 Four California utilities held nearly 90% of small-scale4storage power capacity in the United 

States in 2018.

 

4 Small-scale refers to systems connected to the distribution network and have a nameplate power capacity less than 1 MW.
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U.S. Energy Information Administration | US. Battery Storage Market Trends 7

Battery storage costs have been driven by technical characteristics such as the power and energy 

capacity of a system. 

 On a per-unit of power capacity basis, total installed system costs for batteries of shorter 

duration have been less expensive than long-duration systems (Figure ES2). 

 In terms of costs per-unit of energy capacity, the reverse has been true—longer duration 

batteries have typically had lower normalized costs compared with shorter-duration batteries 

(Figure ES2). 

 Over time, average costs per-unit of energy capacity have decreased by 61% between 2015 and 

2017, from $2,153/kWh to $834/kWh (Figure ES3).

Figure ES2. Total installed cost of large-scale battery storage systems by duration (2013 -2017)

power capacity cost energy capacity cost

dollars per kilowatt dollars per kilowatthour

Source: U.S. Energy Information Administration, Form EIA-860, Annual Electric Generator Report

Figure ES3. Total installed cost of large-scale battery storage systems by year

energy capacity costs

dollars per kilowatthour

Source: U.S. Energy Information Administration, Form EIA-860, Annual Electric Generator Report
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U.S. Energy Information Administration | US. Battery Storage Market Trends 8

Introduction

This report examines trends in the installation of batteries for large-scale electricity storage in the 

United States by describing the current state of the market, including information on applications, costs, 

and market and policy drivers. 

This report focuses on battery storage technologies, although other energy storage technologies are 

addressed in the appendix. Electrical, thermal, mechanical, and electrochemical technologies can be 

used to store energy. 

The capacity of battery storage is measured in two ways: power capacity and energy capacity. 

Generation is often characterized in terms of power capacity, which is the maximum amount of power 

output possible in any instant, measured in this report as megawatts (MW). However, batteries can 

sustain power output for only so long before they need to recharge. The duration of a battery is the 

length of time that a storage system can sustain power output at its maximum discharge rate, typically 

expressed in hours. The energy capacity of the battery storage system is defined as the total amount of 

energy that can be stored or discharged by the battery storage system, and is measured in this report as

megawatthours (MWh). 

Hydroelectric pumped storage, a form of mechanical energy storage, accounts for most (97%) largescale energy storage power capacity in the United States. However, installation of new large-scale 

energy storage facilities since 2003 have been almost exclusively electrochemical, or battery storage. 

This report explores trends in both large-scale and small-scale battery storage systems. EIA defines 

large-scale (or utility-scale) systems as being connected directly to the electricity grid and having a 

nameplate power capacity (the maximum rated output of a generator, usually indicated on a nameplate 

physically attached to the generator) greater than 1 MW. Small-scale refers to systems that have less 

than 1 MW in power capacity. Such systems are typically connected to a distribution network, the 

portion of the electrical system that delivers electricity to end-users.

5

 

5 Large-scale and small-scale reporting conventions are derived from the reporting requirements of the EIA Electric Generators 

Report (Form EIA-860) survey and the EIA Electric Power Industry Report (Form EIA-861) survey. The reporting cut-offs for these 

surveys are based entirely on the power capacity of the generator.
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U.S. Energy Information Administration | US. Battery Storage Market Trends 9

Large-Scale Battery Storage Trends

The first large-scale6 battery storage installation recorded by EIA in the United States that was still in 

operation in 2018 entered service in 2003. Only 59 MW of power capacity from large-scale battery 

storage systems were installed between 2003 and 2010. However, this sector has experienced growth in 

recent years. Between 2011 and 2018 there were 810 MW of power capacity from large-scale battery 

storage added leaving a total of 869 MW battery storage power capacity operational by the end of 2018. 

Most of existing U.S. power capacity has been installed by independent power producers in the PJM 

Interconnection (PJM), which coordinates the movement of electricity through all or parts of Delaware, 

Illinois, Indiana, Kentucky, Maryland, Michigan, New Jersey, North Carolina, Ohio, Pennsylvania, 

Tennessee, Virginia, West Virginia and the District of Columbia. Regulated utilities in the California

Independent System Operator (CAISO) territory have procured significant amounts of storage capacity 

as well. The United States observed a new record for annual power capacity additions in 2018 when it 

saw 222 MW of large-scale battery storage installed, breaking the previous record of 199 MW added in

2016.

Regional Trends

As shown in Figure 1, about 73% of large-scale battery storage power capacity and 70% of energy 

capacity in the United States is installed in areas covered by independent system operators (ISOs) or 

regional transmission organizations (RTOs)7. The ISOs and RTOs, depicted in Figure 2, account for 58% of 

total grid capacity in the United States and have the largest shares of storage capacity relative to their 

shares of installed grid capacity. The disproportionate share of large-scale battery storage across the 

ISOs and RTOs may result from differences in market design and state policies (See Market and Policy 

Drivers section).

Figure 1. Large-scale power and energy capacity by region (2018)

Sources: U.S. Energy Information Administration, Form EIA-860M, Preliminary Monthly Electric Generator Inventory; U.S. Energy 

Information Administration, Form EIA-860, Annual Electric Generator Report

 

6 Large-scale refers to systems that are grid connected and have a nameplate power capacity greater than 1 MW.

7

ISOs and RTOs are independent, federally regulated non-profit organizations that ensure reliability and optimize supply and 

demand bids for wholesale electric power. 
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Sources: U.S. Energy Information Administration, Form EIA-860M, Preliminary Monthly Electric Generator Inventory; U.S. Energy 

Information Administration, Form EIA-860, Annual Electric Generator Report

Notes: Energy capacity data for large-scale battery storage installed in 2018 are based on preliminary estimates. 

PJM

282 MW

CAISO

180 MW

AK/HI

107 MW

ERCOT

94 MW

MISO

39 MW

ISO-NE

27 MW

Other

131 MW

PJM

176 MWh

120 MWh

1 MWh

energy capacity

megawatthours

AK/HI

174 MWh

ERCOT

54 MWh

MISO

58 MWh

ISO-NE

36 MWh

Other

194 MWh

NYISO

8 MW

power capacity 

megawatts

CAISO

503 MWh

NYISO

41 MWh

40 MW

1 MW

Figure 2 Large-scale battery storage installations by region (2018)
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U.S. Energy Information Administration | US. Battery Storage Market Trends 11

Between 2003 and 2018, 922 MW of large-scale battery storage power capacity across 134 systems was 

installed in the United States, three-quarters of which was installed between 2015 and 2018. More than

30% of existing large-scale battery storage power capacity as of 2018 was located in the PJM 

Interconnection (Figure 2), most of which was built from 2014-2016. This was most likely the result of

changes in PJM’s market for frequency regulation (a grid service that helps balance momentary 

differences between electricity demand and supply within the transmission grid) in 2012 which created 

a specific requirement for fast response resources, such as batteries. In 2015, PJM put a cap on the 

market share for fast responding resources due to grid reliability concerns,

8 and PJM has had relatively 

flat storage growth since these changes were implemented.

Installations in PJM tend to be power-oriented with larger capacities but shorter durations to serve 

frequency regulation applications. In 2018, large-scale battery storage installations in PJM had an 

average power capacity of 10.8 MW and an average duration of 45 minutes. This matches the average 

duration that was observed in 2017 for PJM.

Figure 3. Large-scale battery storage capacity by region (2003–2018)

power capacity energy capacity

megawatts megawatthours

Sources: U.S. Energy Information Administration, Form EIA-860M, Preliminary Monthly Electric Generator Inventory; U.S. Energy 

Information Administration, Form EIA-860, Annual Electric Generator Report

Although installations in CAISO accounted for 21% of existing large-scale battery storage power capacity 

in the United States in 2018, they accounted for 41% of existing energy capacity (Figure 3). California’s

need for battery storage has been for reliability purposes, so large-scale battery storage installations 

tend to be energy-oriented with small power capacities but long durations. 

In 2018, large-scale battery storage installations in CAISO had an average power capacity of 6 MW and 

duration of 3.5 hours (Figure 4). This is longer than the average duration of 3.2 hours in CAISO in 2017.

Other markets in the United States show a mix of power- and energy-oriented battery installations.

 

8 FERC Docket No. ER19-1651-000, PJM Interconnection ORDER ON CONTESTED SETTLEMENT, 

https://elibrary.ferc.gov/idmws/file_list.asp?document_id=14845834
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Of the power capacity in California, 37% was procured by Southern California Edison and San Diego Gas 

and Electric to address reliability risks as a result of constraints on the natural gas supply following a leak 

at Aliso Canyon, a major natural gas storage facility in the region. The California Public Utilities 

Commission (CPUC) requires generation resources to provide at least four hours of output to contribute 

to reliability reserves. As a result, large-scale battery storage installations in California tend to need 

larger energy capacities to qualify as reliability resources. (See Market and Policy Drivers for more 

information on California’s activities related to energy storage.) 

Source: U.S. Energy Information Administration, Form EIA-860M, Preliminary Monthly Electric Generator Inventory; U.S. Energy

Information Administration, Form EIA-860, Annual Electric Generator Report 

Note: Energy capacity data for large-scale battery storage installed in 2018 are based on preliminary estimates. Duration is 

calculated by dividing nameplate energy capacity (in megawatthours [MWh]) by maximum discharge rate (in megawatts [MW]), 

except in cases where the maximum discharge rate was not available, in which case the nameplate rating was used instead.

Ownership Trends

At the end of 2018, slightly more than half (52%) of the existing power capacity of large-scale battery 

storage in the United States was owned by independent power producers (IPPs) while more than half 

(56%) of large-scale battery storage in terms of energy capacity was owned by investor-owned utilities 

(IOUs) (Figure 5). This ownership structure reflects the dominance of IPPs in PJM with its power-oriented 

storage applications and the IOU ownership of energy-oriented reliability assets in CAISO. 

Figure 5. Large-scale battery storage capacity by region and ownership type (2018)

power capacity energy capacity

megawatts megawatthours

Source: U.S. Energy Information Administration, Form EIA-860, Annual Electric Generator Report

Figure 4. Power capacity and duration of large-scale battery storage by region (2018)
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U.S. Energy Information Administration | US. Battery Storage Market Trends 13

Although there are relatively fewer large-scale battery storage installations outside of PJM and CAISO, 

some noteworthy points emerge in other regions. Most (94%) of the installations in the Electric 

Reliability Council of Texas (ERCOT), which is regulated by the Public Utility Commission of Texas, are 

owned by IPPs. Of the eight installations in Mid-Continent Independent System Operator (MISO), six are 

owned by IOUs. In Alaska, most large-scale battery storage energy capacity is owned by IPPs, while the 

power capacity is split between cooperatives and IPPs. State-owned utilities in the U.S. own 8% of largescale battery storage power capacity, driven by a single large (30 MW/20 MWh) installation in southern 

California owned by the Imperial Irrigation District.

Chemistry Trends

Chemistry Descriptions

Battery storage technologies make use of several different battery chemistries. The most common that 

have seen large-scale deployment9,10,11 in the United States include: 

 Lithium-ion technology, which represented more than 90% of the installed power and energy 

capacity of large-scale battery storage in operation in the United States at the end of 2018.

Lithium-ion batteries have high-cycle efficiency (they don’t lose much energy between recharge 

and discharge) and fast response times. In addition, their high energy density (stored energy per 

unit of weight) makes them the current battery of choice for most portable electronic and 

electric vehicle applications.

 Nickel-based batteries were used in some of the earliest large-scale battery storage installations

in the United States, including a 2003 system added in Fairbanks, Alaska. Since then, the 

deployment of this battery chemistry has been limited. Nickel-based batteries typically have 

high energy density and reliability but relatively low cycle life (fewer recharge/discharge cycles 

before degrading performance beyond specifications for the application).

 Sodium-based battery storage accounted for 2% of the installed large-scale power capacity and 

6% of the installed large-scale energy capacity in the United States at the end of 2018. Sodium 

based battery storage is an established technology based on abundant materials with a long 

cycle life suitable for long-discharge applications. These systems require high operating 

temperatures as they utilize molten sodium to operate (~300°C). 

 Lead acid is one of the oldest forms of battery storage; its development began in the mid-1800s. 

Lead acid is widely used as a starter battery in vehicles. Lead acid covered only 1% of large-scale 

battery storage capacity installed at the end of 2018 in the United States and has seen limited 

grid-scale deployment because of its relatively low energy density and cycle life. 

 Flow battery systems have one or more chemical components that are dissolved in a liquid 

solution. The chemical solutions are typically stored in tanks and separated by a membrane. The

overall battery capacity is determined by tank size and can be expanded to meet different 

applications. They have a long cycle life, and their operational lifetime is projected to be long. At 

the end of 2018, flow batteries represented less than 1% of the installed power and energy 

capacity of large-scale battery storage in the United States. 

 

9 Akhil, Abbas A., et al. DOE/EPRI Electricity Storage Handbook in Collaboration with NRECA. January 2015. 

http://www.sandia.gov/ess/publications/SAND2015-1002.pdf

10 Chen, Haisheng, et al. Progress in electrical energy storage system: A critical review. Progress in Natural Science, March 2009.

11 Luo, Xing, et al. Overview of current development in electrical energy storage technologies and the application potential in 

power system operation. Applied Energy, January 2015
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U.S. Energy Information Administration | US. Battery Storage Market Trends 14

Chemistry Trends

The earliest large-scale battery storage installations in the United States used nickel-based and sodiumbased chemistries (Figure 6). However, since 2011, most installations have opted for lithium-ion 

batteries, including retrofits of older systems that initially relied on different chemistries. For example, 

in 2012, Duke Energy added 36 MW of lead-acid battery storage to its Notrees wind power facility in 

West Texas. When the lead-acid batteries were first installed, the battery system participated in the 

region’s frequency regulation market, which required rapid charging and discharging that significantly 

degraded the batteries. In 2016, Duke Energy replaced the original lead-acid batteries with better 

performing lithium-ion batteries.12

Figure 6. Large-scale battery storage capacity by chemistry (2003–2018)

power capacity energy capacity

megawatts megawatthours 

Source: U.S. Energy Information Administration, Form EIA-860, Annual Electric Generator Report

Flow batteries are an emerging energy storage technology. The first large-scale flow battery storage 

system in the United States was installed in Washington in 2016 by Avista Utilities. Two more flow 

batteries were installed in 2017 by electric utilities in Washington and California. The vanadium based 

electrolyte used in these flow battery systems is stored in large tanks and pumped through a separately 

connected electrode system. This configuration allows for greater energy capacities at lower prices, but

it lowers the round trip efficiency13 of the stored electricity as a result of the operation of the pumps.

14

Other battery storage chemistries and technologies are in different phases of development but have yet 

to see significant deployment in large-scale grid applications in the United States. 

 

12 Duke Energy, Duke Energy to upgrade its Notrees Energy Storage System, June 2015, https://news.dukeenergy.com/releases/duke-energy-to-upgrade-its-notrees-energy-storage-system

13 Round-trip efficiency is the battery system efficiency over one cycle, measured as the amount of energy discharged to a 

specified depth over the amount of energy consumed to bring the system back up to its specified initial state of charge.

14 Amerseco, Inc., Demonstrating the Benefits of Long-Duration, Low-Cost Flow Battery Storage in a Renewable Microgrid, 

December 2019, https://www.serdp-estcp.org/Program-Areas/Installation-Energy-and-Water/Energy/Microgrids-andStorage/EW19-5312

lithium-ion 

nickel-based

sodium-based 

lead-acid

other
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U.S. Energy Information Administration | US. Battery Storage Market Trends 15

Current Applications

Batteries have both physical and operational constraints, such as power output and discharge duration. 

These constraints affect individual battery technology choices that are often made with the intent of 

optimizing the delivery of certain types of services or providing specific applications to the electricity 

grid. In some cases it is also possible or even necessary to combine applications to maximize the value of 

the system. For a more complete discussion, please refer to the reference work cited below.

Application Descriptions

The leading types of existing battery applications15 include the following:

 Frequency regulation helps balance momentary differences between electricity demand and 

supply within the transmission grid, often in order to help maintain interconnection frequencies

close to 60 Hertz.

 Spinning reserve is the unused dispatchable generating capacity of online assets that provides

grid frequency management, which may be available to use during a significant frequency 

disturbance, such as during an unexpected loss of generation capacity. This reserve ensures 

system operation and availability. Dispatchable generators are those that can be turned on or 

off in order to meet immediate needs of the system.

 Voltage or reactive power support ensures the quality of power delivered by maintaining the 

local voltage within specified limits by serving as a source or sink of reactive power (the portion 

of electricity that establishes and sustains the electric and magnetic fields of alternating-current 

equipment).

 Load following supplies (discharges) or absorbs (charges) power to compensate for load 

variations—this application is a power balancing application, also known as a form of ramp rate 

control.

 System peak shaving reduces or defers the need to build new central generation capacity or 

purchase capacity in the wholesale electricity market, often during times of peak demand.

 Arbitrage occurs when batteries charge during periods when electrical energy is less expensive 

and discharge when prices for electricity are high, also referred to as electrical energy time-shift.

 Load management provides a demand side customer-related service, such as power quality, 

power reliability (grid-connected or microgrid operation), retail electrical energy time-shift, 

demand charge management, or renewable power consumption maximization (charging the 

battery storage system during periods when renewable energy is greatest so as to consume the 

maximum renewable energy from the battery system, i.e. charging with solar during the day or 

charging with wind during high wind periods).

 Storing excess wind and solar generation reduces the rate of change of the power output from 

a non-dispatchable generator in order to comply with local grid requirements related to grid 

stability or prevent over production or over-production penalties. Non-dispatchable generators 

cannot be turned on or off in order to meet immediate needs and are often intermittent 

resources (generators with output controlled by the natural variability of the energy source, for 

example wind and solar).

 

15 DNV-GL, Recommended Practices: Safety, operation and performance of grid-connected energy storage systems, September 

2017, https://rules.dnvgl.com/docs/pdf/DNVGL/RP/2017-09/DNVGL-RP-0043.pdf?_ga=2.80787476.2095102769.1516371272-

888917498.1516371272
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U.S. Energy Information Administration | US. Battery Storage Market Trends 16

 Backup power, following a catastrophic failure of a grid, provides an active reserve of power 

and energy that can be used to energize transmission and distribution lines, provides start-up 

power for generators, or provides a reference frequency. 

 Transmission and distribution deferral keeps the loading of the transmission or distribution 

system equipment below a specified maximum. This application allows for delays in 

transmission upgrades, avoids the need to upgrade a transmission system completely, or avoids 

congestion-related costs and charges.

 Co-located generator firming provides constant output power over a certain period of time of a 

combined generator and energy storage system. Often the generator in this case is a nondispatchable renewable generator (for example, wind or solar). 

Applications by Region

Figure 7 illustrates the total amount of power and energy capacity that was available for each 

application in the United States in 2018. In the United States, 75% of large-scale battery storage power 

capacity provides frequency regulation, which helps systems quickly balance unexpected differences in 

electricity supply and demand. Installations in PJM have driven this trend, where a specific market 

product for fast-ramping frequency regulation led independent power producers to rapidly deploy largescale battery storage. Installations in CAISO as of 2018 tended to serve a wider array of applications than 

those in PJM because many had been procured by regulated utilities to serve multiple applications 

without necessarily being directly compensated for each application through market mechanisms.

Figure 7. Applications served by large-scale battery storage (2018)

power capacity energy capacity

megawatts megawatthours

Source: U.S. Energy Information Administration, Form EIA-860, Annual Electric Generator Report

Figure 7 is based on information provided by EIA-860 survey respondents regarding their market region

and the applications that battery storage systems provided in 2018. A survey respondent was permitted 

to select more than one application provided by each battery system. 

EIA-860 survey respondents reported that storage in PJM was used for primarily only one application 

(frequency regulation), while batteries installed in CAISO were used for several (2.7 applications on 

average). Batteries installed in Alaska and Hawaii were diversely used (4.0 applications on average).
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U.S. Energy Information Administration | US. Battery Storage Market Trends 17

Battery Storage Costs 

Costs for battery storage technologies depend on technical characteristics such as the power capacity 

and energy capacity of a system. 

Cost Background

This discussion of costs is divided into three main categories based on the nameplate duration of the 

battery storage system, which is the ratio of nameplate energy capacity to nameplate power capacity.

 The short-duration battery storage category includes systems with less than 0.5 hours of 

nameplate duration. 

 The medium-duration battery storage category includes systems with nameplate durations 

ranging between 0.5 hours and 2.0 hours. 

 The long-duration battery storage category includes all systems with more than 2.0 hours of 

nameplate duration. 

The average characteristics of the categorized sample data are summarized in Table 1. These 

categorizations are used in this report to illustrate the importance of defining the system characteristics 

when discussing costs, especially regarding power capacity versus energy capacity. The reported capital 

cost values are from large-scale battery storage systems installed across the United States between 

2013 and 2017 and include multiple reported battery chemistries. 

As shown in Table 1, for costs reported between 2013 and 2017, short-duration battery storage systems 

had an average power capacity of 11.7 MW, medium-duration systems had an average capacity of 7.2 

MW, and long-duration battery storage systems had 6 MW. The average energy capacity for the shortand medium-duration battery storage systems were 4.2 and 6.6 MWh, respectively. The average for the 

long-duration battery storage systems was 23.5 MWh, between 4 and 6 times more than the average 

energy capacity of short and medium duration battery storage systems.

Table 1. Sample characteristics of capital cost estimates for large-scale battery storage by duration

(2013 -2017)

Shortduration

<0.5 hours

Mediumduration

0.5–2 hours

Longduration

>2 hours

Number of battery systems with reported costs available 22 20 16

Average of nameplate power capacity, megawatts (MW) 11.7 7.2 6.0

Average of nameplate energy capacity, megawatthours (MWh) 4.2 6.6 23.5

Average of nameplate duration, hours 0.4 1.1 4.2

Capacity-weighted cost per unit power capacity, 

dollars per kilowatts ($/kW) 

864 1,554 3,006

Capacity-weighted cost per unit energy capacity, 

dollars per kilowatthour ($/kWh)

2,425 1,710 772

Source: U.S. Energy Information Administration, Form EIA-860, Annual Electric Generator Report
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U.S. Energy Information Administration | US. Battery Storage Market Trends 18

Cost Results 

Based on costs reported between 2013 and 2017, battery systems with shorter durations typically had

lower normalized power capacity costs measured in dollars per kilowatt ($/kW) than batteries with 

longer nameplate durations (Figure 8). The opposite was generally true when examining normalized 

energy capacity costs measured in dollars per kilowatthour ($/kWh) because total system costs for 

longer-duration systems are spread out over more stored energy. Nonetheless, the range of normalized 

cost values was driven by technological and site-specific requirements. 

Figure 8. Total installed cost of large-scale battery storage systems by duration (2013 -2017)

power capacity cost energy capacity cost

dollars per kilowatt ($/kW) dollars per kilowatthour ($/kWh)

Source: U.S. Energy Information Administration, Form EIA-860, Annual Electric Generator Report

Normalized energy capacity costs have decreased over time (Table 2, Figure 9). The capacity-weighted 

average installed cost of large-scale batteries fell by 34% from $2,153/kWh in 2015 to $1,417/kWh in 

2016. This trend continued into 2017 with another decrease in average installed costs of 41% to 

$834/kWh. This trend ultimately resulted in a total 61% decrease in average installed costs between 

2015 and 2017. 

Table 2. Sample characteristics of capital cost estimates for large-scale battery storage by year

2015 2016 2017

Number of battery systems with reported costs available 10 21 22

Average of nameplate power capacity, megawatts (MW) 12.7 10.4 5.6

Average of nameplate energy capacity, megawatthours (MWh) 5.4 12.2 10.6

Average of nameplate duration, hours 0.5 1.5 1.8

Capacity-weighted cost per unit power capacity, 

dollars per kilowatts ($/kW) 913 1,664 1,587

Capacity-weighted cost per unit energy capacity, 

dollars per kilowatthour ($/kWh) 2,153 1,417 834

Source: U.S. Energy Information Administration, Form EIA-860, Annual Electric Generator Report
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U.S. Energy Information Administration | US. Battery Storage Market Trends 19

energy capacity costs

dollars per kilowatthour

Source: U.S. Energy Information Administration, Form EIA-860, Annual Electric Generator Report

Note: Cost observations for installation years 2013 and 2014 were dropped from this figure as a result of small sample sizes for 

those respective years.

Unlike non-storage technologies, battery storage can supply and consume energy at different times of 

the day, creating a combination of cost and revenue streams that makes it challenging to directly 

compare to generation technologies. They are not stand-alone generation sources and must buy 

electricity supplied by other generators to recharge and cover the round-trip efficiency losses 

experienced during cycles of charging and discharging.

There are two major challenges in determining the profitability and cost of battery storage systems. 

First, quantifying the competitiveness of a battery storage technology with other technologies operating 

on the grid must consider the individual markets that the storage technology is planning to be used in 

and what revenue opportunities exist for the technology. The second challenge involves the degradation 

of the system over time, which is the lasting and continuous decrease in either a battery’s power or

energy performance or both and is linked to use or age of a battery component or system. 

The performance can be characterized by the full cycle power input and output at an agreed-upon 

charge/discharge rate. There are two general options that can be employed to ensure reliable 

performance during a storage system’s lifetime: 

 Overbuilding: adding more storage or discharge capacity behind the inverter than is needed, so 

that as the system ages it will maintain a capacity at or above the contracted capacity required 

of the system. 

 Continual Upgrades: replacing some portion of the storage system to maintain the agreed-upon 

performance during its lifetime. 

The two approaches to meeting performance requirements affect the installed capital costs of the 

system. Overbuilding storage capacity leads to a higher initial installed capital cost, while continual 

Figure 9. Total installed cost of large-scale battery storage systems by year
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U.S. Energy Information Administration | US. Battery Storage Market Trends 20

upgrades lead to higher operation and maintenance costs throughout the lifetime of the storage facility. 

Therefore, comparing only the normalized capital cost of various battery systems, as shown in Figure 8, 

does not capture the variation in the lifetime costs. The costs collected and presented in this report are 

not sufficient to capture all of these nuances.

Other Cost Metrics 

In addition to the capital costs presented in this section, EIA has observed trends in battery storage costs

arising from the negotiated price of electricity for projects that are financed through power purchase 

agreements (PPAs). PPAs are contracts between electricity suppliers and electricity buyers (or offtakers) 

at a fixed price per unit of electricity delivered. They represent a predictable, long-term source of 

revenue to the project. The negotiated electricity prices under a PPA are heavily influenced by each 

project’s specifications, contract terms, and other localized factors. Observing PPA prices can give an 

indication of cost trends over time; however, PPA prices are not comparable to total capital costs of the 

system.
July 2020

U.S. Energy Information Administration | US. Battery Storage Market Trends 21

Small-Scale Energy Storage Trends

In 2018, utilities reported 234 MW of existing small-scale storage power capacity in the United States. A 

little more than 50% of this capacity was installed in the commercial sector, 31% was installed in the 

residential sector, and 15% was installed in the industrial sector. The remaining 3% was directly 

connected to the distribution grid, such as by the utility at their own distribution substation. 

The data collected for small-scale applications depend on the electric utility’s access to information 

about installations in its territory. If end users of storage systems are installing systems for purposes 

where the system would not interact with the distribution network—for example back-up applications—

the electricity distribution utility may not know about those system installations. Utilities collect 

information on small-scale storage systems primarily through inter-connection agreements. Because 

these agreements are designed by the utilities, the information about storage units may not be collected 

in a consistent format across all utilities. 

Small-Scale Energy Storage Trends in California

As shown in Figure 10, in 2018, 86% of reported small-scale storage power capacity in the United States 

was in California and, specifically, was owned by six utilities: Southern California Edison (SCE), Pacific Gas 

and Electric (PGE), San Diego Gas and Electric (SDGE), Los Angeles Department of Water and Power

(LADWP), Sacramento Municipal Utility District (SMUD), and City of Moreno Valley. In 2018, most 

installations of small-scale storage in the commercial sector in California were in SCE’s territory (64% of 

such capacity) and SDGE’s territory (22%). Most installations (95%) of small-scale storage in the 

industrial sector in California were in PGE’s territory.

Figure 10. Small-scale energy storage capacity by sector (2018)

Source: U.S. Energy Information Administration, Form EIA-861, Annual Electric Power Industry Report

Note: Data collected on small-scale storage may include forms of energy storage other than batteries. Direct-connected storage 

is not located at an ultimate customer’s site but is in front of the meter or connected directly to a distribution system or both. 

Direct-connected storage in California and industrial storage outside of California are less than 1% of the total and are therefore 

not depicted in the figure. 
July 2020

U.S. Energy Information Administration | US. Battery Storage Market Trends 22

California’s large share of small-scale energy storage power capacity can be attributed to the state’s 

Self-Generation Incentive Program (SGIP), which provides financial incentives for installing customersited distributed generation. Installations receiving rebates through SGIP contribute to California’s 2013 

energy storage mandate (Assembly Bill 2514), which requires 200 MW of customer-sited energy storage 

to be installed by 2024. In May 2017, the California Public Utilities Commission implemented Assembly 

Bill 2868 by ordering SCE, PGE, and SDGE to procure up to an additional 500 MW of distributed energy 

storage, including no more than 125 MW of customer-sited energy storage.

Small-Scale Energy Storage Trends in the Rest of the United States

After California, the states with the most small-scale storage power capacity in 2018 were Hawaii, 

Vermont, and Texas, and much of this capacity was installed in the residential sector (Figure 11). 

Minimal small-scale storage power capacity in the industrial sector existed outside of California. In the 

commercial sector, small-scale storage was mostly available in Hawaii and New York, as well as other 

states, notably in Georgia, Illinois, and Utah.

Figure 11. Small-scale energy storage capacity outside of California by sector (2018)

power capacity 

megawatts

Source: U.S. Energy Information Administration, Form EIA-861, Annual Electric Power Industry Report

Small-scale energy storage system are typically owned by end-users. Direct-connected storage systems 

are installations not located at an ultimate customer’s site but rather in front of the meter or connected 

directly to a distribution system or both. In Vermont, Green Mountain Power Corporation reported the 

largest amount of direct-connected battery storage power capacity. Green Mountain operated front-ofthe meter battery storage systems for customers that totaled 5.5 MW of power capacity in 2018.

residential 

commercial 

industrial 

direct 

connected
July 2020

U.S. Energy Information Administration | US. Battery Storage Market Trends 23

Market and Policy Drivers

As discussed previously, battery storage is technologically capable of serving many applications, each 

with benefits for one or more participants in the electricity system, including transmission and 

distribution system operators, generation resources, and consumers. However, the functional ability of 

storage to serve these applications can be limited or not well defined under existing market rules and 

other policies. This situation has begun to change as the technology has matured and industry 

stakeholders in some regions have gained experience financing, procuring, and operating storage 

installations. Most of the activity has been led by wholesale market operators and state-level regulators.

Wholesale Market Rules

ISOs and RTOs are independent, federally-regulated non-profit organizations that ensure reliability and 

optimize supply and demand bids for wholesale electric power. They are technology neutral and must 

ensure market rules do not unfairly preclude any resources from participating, as enforced by the 

Federal Energy Regulatory Commission (FERC). Many existing market rules may not take into account 

the unique operating parameters and physical constraints of battery storage as both a consumer and 

producer of electricity. However, recent actions by FERC and ISOs/RTOs have begun to carve a path for 

storage to participate in the individual markets. 

A notable example is FERC Order 755, issued in 2011, which required ISO/RTO markets to provide 

compensation to resources that can provide faster-ramping frequency regulation. As a result of Order 

755, PJM split its frequency regulation market into a fast-ramping service and a slower-ramping service. 

By the end of 2015, more than 180 MW of large-scale battery storage capacity had come online in the 

PJM territory. However, in 2015 PJM began observing operational issues due to overdependence on the 

fast-ramping regulation service, which mainly consisted of resources such as batteries with duration 

restrictions, as opposed to the slower-ramping service, which generally consisted of resources which 

could be operated much longer (but took longer to come online)16. PJM thus changed its frequency 

regulation signals, and installations of large-scale battery storage in the region stalled since PJM made 

these changes.

Other system operators have also implemented relevant changes to market rules, including developing 

unique asset classes for storage, specifying participation models, lowering minimum size requirements, 

allowing for aggregation, and defining duration requirements. However, these regions have not seen 

large-scale battery storage deployment at the same level as PJM. In February 2018, FERC issued Order 

No. 841 requiring system operators to remove barriers to the participation of electric storage resources 

in the capacity, energy, and ancillary services markets. Each ISO/RTO under FERC jurisdiction was 

required to revise its tariff to include market rules that recognize the physical and operational 

characteristics of electric storage resources and to implement the revisions upon FERC’s approval of 

 

16 PJM , “Fast Response Regulation (RegD) Resources Operational Impact,” July 01,2017. 

https://www.pjm.com/~/media/committees-groups/committees/oc/20150701-rpi/20150701-fast-response-regulationresources-operational-impact-problem-statement.ashx
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U.S. Energy Information Administration | US. Battery Storage Market Trends 24

tariff compliance. As of May 2020, all ISO/RTO’s had filed multiple tariff revisions but none have been 

fully approved by FERC. 

State-Level Policy Actions

Other than FERC activities described in the previous section, federal policies involving energy storage 

have been limited.

17 Most policy actions involving energy storage have been at the state level and 

include setting procurement mandates, establishing incentives, and requiring incorporation of storage 

into long-term planning mechanisms.

Policy Actions in California

California has introduced several measures related to energy storage. In 2013, the California Public 

Utility Commission (CPUC) implemented Assembly Bill 2514 by setting a mandate for its investor-owned 

utilities to procure 1,325 MW of energy storage across the transmission, distribution, and customer 

levels by 2020. All of the capacity must be operational by 2024. In May 2017, CPUC implemented 

Assembly Bill 2868 by ordering its investor-owned utilities to procure up to an additional 500 MW of 

distributed energy storage, including no more than 125 MW of customer-sited energy storage. The SelfGeneration Incentive Program, which provides financial incentives for installing customer-sited

distributed generation, has designated $48.5 million in rebates for residential storage systems 10 kW or 

smaller and $329.5 million for storage systems larger than 10 kW.

Press reports in 2017 indicated that 100 MW, or about 37% of existing battery storage power capacity in 

California, was installed in response to a leak at the Aliso Canyon Natural Gas Storage Facility outside Los 

Angeles in October 2015. 18 According to these reports, in May 2016, to help address resulting reliability 

risks as a result of constraints on natural gas supply, the CPUC authorized the Southern California Edison 

electric utility to hold an expedited solicitation for energy storage. As a result, 62 MW of battery storage 

capacity was added to the system in December 2016. In addition, the CPUC expedited an ongoing

procurement of 38 MW of battery storage by San Diego Gas and Electric, which was installed in early 

2017.

Policy Actions in the Rest of the United States

As of May 2020, five states besides California have also set energy storage mandates or targets. In 2015, 

Oregon passed House Bill 2193-B, directing two electric utilities to each procure 5 MWh of storage 

energy capacity by 2020. In August 2018, Massachusetts enacted House Bill 4857 (“An Act to Advance 

Clean Energy”), directing the Massachusetts Department of Energy Resources set an energy storage 

target of 1,000 MWh by 2025. In October 2018, New York announced a target of 3,000 MW of energy 

storage by 2030. In May 2018, New Jersey enacted the Clean Energy Act, P.L. 2018, which set a target of 

2,000 MW of energy storage by 2030. In February 2020, Virginia passed House Bill 1526, which set a 

3,100 MW energy storage goal by 2035. In addition, some states, such as Nevada, allow storage systems 

 

17 One exception is the investment tax credit (ITC), which is a credit to income tax liability proportional to the capital 

expenditures originally intended for certain renewable energy technologies, including solar and wind. Energy storage installed 

at a solar or wind facility can be considered part of the energy property of the facility and can receive a portion of the tax credit.

18 Green Tech Media, “Tesla, Greensmith, AES Deploy Aliso Canyon Battery Storage in Record Time,” January 31, 2017,

https://www.greentechmedia.com/articles/read/aliso-canyon-emergency-batteries-officially-up-and-running-from-teslagreen#gs.bvJdDKY
July 2020

U.S. Energy Information Administration | US. Battery Storage Market Trends 25

to be included in state-level renewable portfolio standards. Aside from targets, some states have 

provided financial incentives for energy storage installations, including grants, support for pilot projects, 

and tax incentives. In 2018, Maryland passed Senate Bill 758, offering a tax credit of 30% on the installed 

costs for residential and commercial systems. 

Many states require utilities to produce integrated resource plans (IRPs) that demonstrate each utility’s 

ability to meet long-term demand projections using a combination of generation, transmission, and 

energy efficiency investments, while minimizing costs. Incorporating storage into IRPs can be a challenge 

because storage is different from conventional electricity generators and demand-side resources. For 

example, storage has unique operational constraints, can be interconnected at various points 

throughout the system, can serve a variety of applications, and is faced with policy and regulatory 

uncertainty that may affect system profitability. Nonetheless, some states have begun to require utilities 

to include storage in integrated resource plans, including Arizona, California, Connecticut, Colorado, 

Florida, Indiana, Kentucky, Massachusetts, New Mexico, North Carolina, Oregon, Utah, Virginia, and 

Washington. New York and Vermont include storage in their state energy plans.

19

 

19 PV Magazine, “Utilities are increasingly planning for energy storage,” December 7, 2017, https://pv-magazineusa.com/2017/12/07/utilities-are-increasingly-planning-for-energy-storage-w-charts/
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U.S. Energy Information Administration | US. Battery Storage Market Trends 26

Ongoing Trends

For the short term, EIA assesses future battery capacity installation trends using planned generator 

additions reported by project developers, both for stand-alone battery storage systems and for those 

co-located with other electricity generating technologies such as solar or wind. EIA provides long-term

projections on future battery capacity installations in the Annual Energy Outlook. 

Near-Term Planned Capacity Additions (2020–23)

As of December 2019, project developers reported to EIA that they planned to make 3,616 MW of largescale battery storage operational in the United States between 2020 and 2023. Given the short planning 

period required to install a storage facility, the reported planned capacity does not necessarily reflect all 

the possible builds during this period, but the reported planned capacity can be used as an indicator of 

trends. 

Figure 12. Large-scale battery storage cumulative power capacity (2010–2023)

Source: U.S. Energy Information Administration, Form EIA-860M, Preliminary Monthly Electric Generator Inventory

California accounted for 38% of planned battery storage power capacity reported as of December 2019. 

These planned additions put California in line to meet its energy storage mandate (Assembly Bill 2514), 

which requires its investor owned utilities to install 1,325 MW of energy storage across the transmission, 

distribution, and customer levels by 2024. New York and Massachusetts also have state mandates for 

energy storage and have planned battery storage projects in the upcoming years. Virginia and New 

Jersey have mandates but have not reported any planned energy storage builds to EIA (See Market and 

Policy Drivers for more information). Several states without policy mandates show relatively strong 

growth in storage in the upcoming years, including Nevada, Florida, and Arizona.

Co-Located Battery Storage Projects

Pairing renewable energy power plants with energy storage is a trend of increasing importance as the 

cost of energy storage declines. The number of solar and wind generation sites co-located with battery 
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U.S. Energy Information Administration | US. Battery Storage Market Trends 27

storage systems has increased from 19 paired sites in 2016 to 53 sites in 2019. Data reported for 

proposed projects suggest that the number of co-located sites may double by 2023 from 2019 levels.

Figure 13. Count and capacity of renewable plus storage facilities (2011–2023)

Source: U.S. Energy Information Administration, Form EIA-860M, Preliminary Monthly Electric Generator Inventory; U.S. Energy 

Information Administration, Form EIA-860, Annual Electric Generator Report.

Among the benefits of these co-located projects, the most critical is the ability to take advantage of 

common onsite infrastructure to store renewable-generated energy produced during periods of low 

electricity prices and low demand, and later supply that stored energy to the grid when both demand

and electricity prices are higher. Solar and wind technologies are the more common generators that

benefit from battery storage because of their intermittent operation. The benefits of later pairing 

battery storage can also be realized even after the renewable energy power plant has initially entered 

into operation. More than 25 solar and wind power plants have added battery storage systems after 

their original operation date. As of February 2020, more than 90% of the operating capacity from colocated battery and renewable generation sites were located in nine states. Texas had the most colocated battery storage capacity with 886 MW (renewable plus storage capacity) as of February 2020 

(Figure 14). On average, existing co-located projects have a renewable nameplate capacity to battery 

power capacity ratio of 6:1, and planned projects have a power capacity ratio of 2:1. As of 2019, 10 of 

the 53 co-located facilities accounted for more than half of the combined renewable and battery storage 

capacity. Of all operating battery storage capacity in the United States as of 2019, 25% was installed in 

paired systems, while of all the operating solar capacity in the United States, only 2% was in paired with 

an energy storage system. By December 2023, 2.3 gigawatts (GW) of the 4.9 GW (47%) of operating 

battery storage is planned to be paired onsite with renewable generation.
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U.S. Energy Information Administration | US. Battery Storage Market Trends 28

Figure 14. Operating and planned renewable plus storage capacity, top 10 states

power capacity

gigawatts

Source: U.S. Energy Information Administration, Form EIA-860M, Preliminary Monthly Electric Generator Inventory; U.S. Energy 

Information Administration, Form EIA-860, Annual Electric Generator Report.

Long-Term Projected Capacity Additions (2020–2050)

The Annual Energy Outlook 2020 (AEO2020) provides projections to 2050 on the supply and demand 

needs for energy markets in the United States. The Reference case, which assumes implementation of 

current U.S. laws and policies, projects large-scale battery storage capacity to grow from 1 GW in 2019

to 17 GW in 2050 (Figure 15Figure 14). 

In addition to the Reference case, AEO2020 examines the sensitivity of model results to changes in 

various assumptions. In the Low Renewables Cost case, where the costs of renewable technologies are 

assumed to decline at a faster rate, ending at 40% lower than the Reference case by 2050, higher levels 

of energy storage support increased solar and wind capacity additions. In the Low Oil and Gas Supply 

case, less availability of natural gas results in higher natural gas prices. Because natural gas-fired 

combined-cycle generating units and solar facilities compete with each other, increased natural gas 

prices promote the growth of solar and thus storage as in the Low Renewables Cost case. In addition, 

the high price of natural gas used by combustion turbine peaking units allows more market opportunity 

for energy arbitrage, which also supports the growth of energy storage. These factors contribute to the 

Low Oil and Gas Supply case showing the most storage capacity additions of any of the AEO2020 

projections.
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U.S. Energy Information Administration | US. Battery Storage Market Trends 29

Figure 15. AEO2020 power capacity by case and selected technology, 2050

power capacity

gigawatts

Source: U.S. Energy Information Administration, Annual Energy Outlook 2020

When looking at the regional trends in the Reference case and side cases (Figure 16), growth in energy 

storage capacity follows growth in solar photovoltaic (PV) capacity, but it does not correlate strongly 

with growth in wind generation capacity. The Southeast region is very sensitive to the varying 

assumptions in the side cases, showing strong growth relative to the Reference case in both the Low Oil 

and Gas Supply case and Low Renewables Cost case. All cases show limited storage growth in the 

Northeast, PJM, and West regions.
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U.S. Energy Information Administration | US. Battery Storage Market Trends 30

Figure 16. AEO2020 regional diurnal storage versus solar photovoltaic power and wind capacity, 2050

power capacity 

gigawatts 

Source: U.S. Energy Information Administration, Annual Energy Outlook 2020

Because long-term planning models are designed to deliver multi-decade results with many complex 

interactions, modelers often have to simplify their modeling of energy storage technologies. One 

simplification that has significant consequences for the representation of energy storage technologies is 

the temporal resolution of the model. EIA’s AEO2020 included energy storage as a four-hour battery 

system that can be used to avoid curtailments of excess solar- and wind-generated electricity, shift 

energy within a day, and help meet regional reliability requirements; however, modeling sub-hourly 

markets, such as battery systems participating in frequency response, remains a challenge. As a result, 

EIA’s AEO projections as shown do not represent all of the available storage technology options nor the 

full suite of applications that storage can serve. See the list of possible applications for storage in the 

Current Applications section of this report.

EIA has been collaborating with other modeling entities on a multi-model comparison20 to enhance the 

representation of technologies that challenge conventional long-term planning model design, such as 

wind, solar, and energy storage. The representation of battery storage in the AEO will continue to 

develop as the markets and applications for energy storage evolve.

 

20 Cole, Wesley, et al, Variable Renewable Energy in Long-Term Planning Models: A Multi-Model Perspective, November 2017,

https://www.energy.gov/eere/analysis/downloads/variable-renewable-energy-long-term-planning-models-multi-modelperspective.
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U.S. Energy Information Administration | US. Battery Storage Market Trends 31

Appendix A: Other Storage Technologies

This report has focused primarily on electrochemical energy (or battery) storage; however, energy 

storage can take other forms including electrical, thermal, and mechanical. Electrical energy storage 

includes capacitors and superconductors. Thermal storage includes water, ice, molten salts, and 

ceramics. Mechanical includes technologies such as hydroelectric pumped storage, flywheels, and 

compressed-air energy storage (CAES). 

Hydroelectric pumped storage uses electricity to pump water into an elevated reservoir so it can be 

used to drive a hydroelectric turbine when electricity is needed. Although the United States has 

significantly more operating hydroelectric pumped storage capacity than battery storage capacity, most 

of it was installed in the 1970s and early 1980s (Figure 17). California, Virginia, and South Carolina 

account for most of the existing hydroelectric pumped storage capacity. The largest single facility in the 

United States was installed in 1985 in Bath County, Virginia, and has a capacity of 3 GW.

Figure 17. Hydroelectric pumped storage capacity (1960–2018)

power capacity 

gigawatts

Source: U.S. Energy Information Administration, Form EIA-860, Annual Electric Generator Report

Flywheels store energy by using an electric motor to speed up a spinning mass, which can then be used 

later to spin a turbine to produce electricity. To reduce losses, the mass is spinning in a nearly 

frictionless enclosure. Flywheels are well suited to provide power-oriented applications that require 

many charge and discharge cycles. Three large-scale flywheel systems are currently operating in the 

United States: a 20 MW system in New York, a 20 MW system in Pennsylvania, and a 2 MW system in 

Alaska. One standby flywheel system of 5 MW currently exists in Texas.

CAES uses electricity to compress air and store it in an underground cavern. The air is then expanded 

through a turbine when electricity is needed. The only operable large-scale CAES system in the United 

States is a 110 MW system that was installed in Alabama in 1991 by PowerSouth Energy Cooperative. 

0

5

10

15

20

25

pumped

hydroelectric

storage

large-scale

battery

storage

0

5

10

15

20

25

30

0

2

4

6

8

10

12

before

1960

1960s 1970s 1980s 1990s 2000s 2010-

2018

cumulative 

additions cumulative capacity
July 2020

U.S. Energy Information Administration | US. Battery Storage Market Trends 32

The Apex Bethel Energy Center is a 317 MW CAES system in Texas that is expected to enter operation in 

2022.

Thermal storage systems take excess energy produced during the day to heat salt or other materials that 

can be used later to power a steam turbine. Thermal storage can also be used as a distributed energy 

resource, for example, by chilling water overnight to use for space cooling during summer days. All 

existing large-scale thermal energy storage in the United States uses concentrated solar power (CSP) 

technology. CSP reflects rays from the sun to a receiver to produce steam directly or to heat up 

alternative fluids, which are used to generate steam through a heat exchanger. The steam is then run 

through a turbine to generate electricity. Some of these alternative heat transfer or storage fluids can 

store energy for long durations, and they can be used to generate steam and electricity at night using 

thermal solar energy gathered during the day. Of the eight CSP projects currently in operation (totaling 

1,775 MW) only Arizona Solar One LLC’s Solana Generating Station plant in Arizona (295 MW) and 

Tonopah Solar Energy LLC’s Crescent Dunes Solar Energy plant in Nevada (110 MW) employ energy 

storage.

Other energy storage technologies are in different phases of development but have yet to see significant 

deployment in large-scale grid applications.