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Lithium-ion batteries have long been in the news because of their role in electric vehicles, but uses for this technology are expanding to the utility industry. Batteries that can be charged and discharged quickly, and re-used for thousands of cycles, open up options for utility-scale energy storage that haven’t been economic before.

Now that utility-scale lithium batteries are available at commercial scales and reasonable prices, they are being adopted by the utility industry itself. As advanced batteries are proven on larger and larger scales, more and more utilities will adopt them, and costs will fall further.

Utilities are aware of the value of low-cost batteries. Renewable hydro, solar and wind systems are often capable of producing “surplus” energy when the grid doesn’t need it at that instant. These generation systems don’t use nuclear or fossil fuels. Their maintenance costs are about the same whether they generate all the energy they’re capable of producing or not. Therefore, the cost of producing this “surplus” energy is almost zero. However, there’s no point in doing so if it can’t be stored.

Storage that can be used to capture “surplus” energy when it’s available, and then put it back onto the grid during period of high demand, is extremely helpful in keeping the cost of electricity down. Stored renewable energy can directly replace new generation from fueled power plants, and can also keep utility capital costs down by reducing the need to build any type of new power plant, whether fueled or renewable.

Washington, unlike most places, has long had large-scale hydroelectric dams. When electricity is available at low cost, water is pumped back to the lakes above Washington’s dams. At a wholesale level, energy that costs less than a cent per kilowatt-hour can be used to store energy that can then be sold during times of higher demand for wholesale prices of 3 cents a kilowatt-hour, or even more.

Pumped hydro storage also reduces the need for Washington utilities to turn on little-used backup generators during times of extremely high demand. Such generation is extremely expensive in jurisdictions that don’t have large-scale storage, because the entire cost of the generation plants has to be paid back within the few hours a year that they’re used.

For decades, pumped hydro storage has been reducing Washington utilities’ net costs. It helps to keep rates low and stable. Other places haven’t been able to take advantage of storage opportunities, because pumped hydro storage has been the only form of storage available at a reasonable cost at a utility’s scale.

However, as I mentioned last week, the cost of batteries that can be used for thousands of cycles has fallen more than 99% over the last 30 years. As mass production continues to increase, and as battery chemistries are developed to reduce the use of expensive cobalt and nickel, costs will fall further.

These new battery systems are already being used at utility scale to keep costs down and reliability up, both by capturing otherwise-unused renewable energy from afternoon solar and overnight wind, and by addressing some other utility system issues. For instance, fast-reacting large-scale battery storage can bridge small gaps in power supply while large generators are starting up. Batteries will thus reduce the need to use excess fueled power to maintain power quality and supply.