by Bob Shively, Enerdynamics President and Lead Facilitator
“Building networks to accommodate peak demand – or lulls in supply – requires overbuilding of infrastructure that leads to extra costs and system inefficiencies.”
~ Sam Wilkinson, IHS 
As we explored in last week’s blog, the gas system has optimized the mix of pipeline capacity, storage, and customer demand management to reduce the costs of building expensive infrastructure.
While the electric grid has utilized demand side management to reduce peak capacity needs, it until recently only had one cost-effective form of storage — pumped hydro — which is only available in limited geographic regions. (As of 2015, the U.S. had 156 pumped hydro plants that made up 2% of the peak summer capacity.) Hence almost all fluctuations in demand are met by adjusting supply through power plant dispatch. The result is significant power plant capacity that sits idle much of the year.
However, recent advances and falling costs in electric storage technologies, especially lithium ion batteries, suggest that a new paradigm of optimized storage throughout the grid may rapidly change principles of electric system design and operations.
“Similar to the rise of wind and solar generation in the last 15 years, we are now starting to see exponential growth in the deployment of battery-based energy storage systems, thanks in part to a rapid decline in pricing for lithium-ion batteries.” 
Source: Bloomberg New Energy Finance
The potential for cost-effective electric storage is coming none too soon — the system that once had to accommodate fluctuations in demand now needs to also accommodate lulls in supply as more renewables with variable output are connected to the grid. This is true on the bulk power system as indicated by the now famous California duck curve as well as on specific distribution circuits as demonstrated by the Hawaii “Loch Ness Monster” curve.
Fortunately, the modular nature of batteries allows for the possibility of placing storage on the grid where it is most beneficial, ranging from centralized renewable generators all the way to behind the customer meter. Making distributed storage most useful will require communications systems that allow storage to be operated as part of the greater distribution and/or transmission system. Again, developments in battery technologies are being accompanied by rapid expansion of digital communications networks throughout the distribution grid all the way to the customer meter.
Source: EIA Today in Energy
Many utilities are now implementing various storage projects to develop the knowledge that will result in growing use of developing storage technology. We will look forward to watching the evolution of the electric grid as cost effective storage allows new forms of optimal design and operations.
Want to learn more about how electric systems work? Look into Enerdynamics’ Electric Systems Fundamentals seminar available online or live. And if you want to learn more about energy storage, contact us about Enerdynamics’ live seminar Energy Storage: Applications, Technologies, and Economics.
 From Reaching peak performance: What the electric power sector can learn from society’s other vital networks, Sam Wilkinson, available at https://cdn2.hubspot.net/hubfs/2810531/Collateral/AES%20ES%20White%20Paper%20-%20IHS-Markit%20The%20New%20Energy%20Network.pdf
 Ibid, p. 3