Advanced energy storage technology continues to develop, with projects moving out of the pilot stages and into commercial-scale, economically viable deployments.

Lithium ion battery technology is technically and economically superior to traditional generation-based mechanisms used for ancillary services, including frequency regulation, spinning reserve and renewable integration. 

In addition to those services, another existing scenario where advanced energy storage demonstrates significant promise is in helping to defer investment in and optimize costly transmission and distribution (T&D) upgrades, especially where right-of-way is limited or accessibility is reduced.

T&D assets are sized to meet peak demand, but are rarely used at those levels. As demand increases, T&D assets need to be upgraded to serve growing peak demand, while maintaining all assets in the T&D delivery chain within their ratings.

The cost of adding T&D assets, which includes the capital cost of equipment, an annual financial carrying charge and operation and maintenance fees, can be significant. In most cases, however, the total capacity of the T&D asset increase is not needed immediately as the upgrades are generally planned to support projected demand several years ahead of time and typically come in large incremental blocks of added capacity. 

Advanced energy storage can be deployed to defer the considerable cost associated with adding T&D capacity by offering a solution that can be added to the grid incrementally, which coincides with the incremental increase in demand. Storage can also be permitted and placed close to load, thus relieving the complete delivery chain—from the original source of generation, through the T&D delivery chain and to the point of use.

For example, a utility determines that it needs to add 2 MW of T&D assets to an 8-MW distribution system to meet projected demand. In the U.S., demand typically increases by a few percentages points per year, so the utility will likely only need to increase capacity by about 240 kW per year. Instead of implementing the entire 2-MW T&D upgrade, the utility can opt to deploy 240-kW advanced energy storage systems to keep up with demand, the cost of which is comparable to the annual carrying charge associated with the full asset deployment.

Over time, the T&D upgrades — including new transformer banks as well as additional transmission lines and distribution circuit capacity — must ultimately be executed to meet the demand increase. At that point, the modular design of lithium ion battery energy storage solutions enables them to be economically detached and redeployed at another point in the distribution system for T&D deferral at a different substation. Because lithium ion battery systems offer a lengthy service lifetime, this process can be repeated several times as necessary.

In addition to mitigating the significant costs associated with T&D asset investment, deploying advanced energy storage for T&D deferral can increase asset utilization by eliminating the need for capital upgrades to meet brief duration peak system loads. The ability to “peak shave” at the circuit, substation and even system level through aggregation will offer utilities a reliable and effective new alternative to increasing total system asset capacity factor, which measures asset utilization. Better asset utilization ultimately means delivering maximum value for utilities’ rate-payer investment in T&D delivery assets.