By Lucas Bettle

 

As the proportion of intermittent renewable energy sources such as solar and wind powering the grid continues to grow, dependable energy storage solutions become more necessary. Storing excess energy production during periods of low demand and releasing energy during peaks is required to make these sources a viable alternative to highly dispatchable fossil fuel generation.

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A variety of grid energy storage technologies are in use today, including lithium-ion batteries, alternative batteries, pumped storage hydropower, and more. Each has its own unique benefits and limitations, along with varying capital and operating costs. While some are more promising than others, a stable renewable energy future will depend on multiple solutions occupying different roles.

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The Role of Energy Storage in a Renewable Grid

Energy storage systems (ESSs) are essential to balance electrical supply and demand in real-time when using intermittent sources. ESSs enable the efficient use of renewable resources while also addressing challenges such as providing spinning reserves and achieving voltage regulation. (Worku, 2022)

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Energy storage shifts supply from generation peaks, such as midday for solar panels, to demand peaks, particularly evening hours. (IEA, 2024) It also defers costly transmission upgrades and provides important black-start capability during outages. (Farivar, 2023) These functions are critical to maintain as fossil-based peak generation plants are retired.

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Short-duration flexibility needs are expected to rise sharply by 2050, largely due to increased adoption of solar power. Batteries are expected to fulfill over 50% of global flexibility demand, with other ESSs supplying the remainder. (Huang, 2022)

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Lithium-Ion Batteries

Lithium-ion batteries, particularly lithium iron phosphate (LFP), have become the dominant short-duration energy storage technology. Decreasing costs, commercial maturity, and scalability make them an attractive solution for any ESS project today. From 2013 to 2023, average lithium-ion battery prices dropped from $800/kWh to under $140/kWh. (IEA, 2024) Installed system costs for LFP battery storage were $356/kWh in 2021 and are expected to reach $291 by 2030. (Viswanathan, 2022)

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Lithium-ion batteries excel in applications up to eight hours. However, their effectiveness declines at longer durations due to cycle life limits and high capital costs per kilowatt-hour at scale. (Viswanathan, 2022) Safety concerns, particularly thermal runaway and fire risk, remain a challenge. (Huang, 2022)

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Sodium-ion batteries are gaining attention as a low-cost alternative, offering 20 to 30% savings over lithium-ion. While less energy-dense, they use more abundant materials and are projected to reach a 10% share of new capacity by 2030. Their growth depends on manufacturing scale and lithium market volatility. (IEA, 2024)

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Alternative Battery Technologies

There are also a variety of alternative battery technologies that could serve as ESSs. Vanadium redox flow batteries (VRFBs) provide long-duration storage with independent scaling of power and energy capacity. This makes them ideal for daily cycling applications. However, high upfront costs and supply constraints surrounding vanadium have limited adoption. (Kebede, 2022)

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Flow battery costs remain high, approximately $385/kWh for a 100 MW, 10-hour system. (Viswanathan, 2022) Low round-trip efficiency and limited state-of-charge range pose additional challenges. However, long cycle life and stable performance over extended periods make them a promising solution for grid ESSs. (Tan, 2021)

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Other battery chemistries such as iron-air and zinc-bromine are also being developed for multi-day or seasonal storage. Low material costs and improved safety make them promising options. (IEA, 2024) These technologies remain technically immature but show promise for affordable long-duration storage post-2030, especially if lithium prices remain volatile. (Huang, 2022)

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Pumped Storage Hydropower

Pumped storage hydropower (PSH) is the most mature and widely deployed grid-scale energy storage technology, accounting for 90% of global installed capacity as of 2020. (Worku, 2022) Water is pumped to an elevated reservoir to store energy, and the energy is released through a hydroelectric generation station. PSH offers high round-trip efficiency from 80 to 90% and reliable daily cycling. (Kebede, 2022)

Installed costs for PSH vary depending on scale and site conditions. In 2021, a 100 MW 10-hour system cost around $263/kWh, while larger 24-hour systems had a lower cost of around $143/kWh. With further scaling, costs could fall to $83/kWh by 2030, making PSH highly competitive for multi-hour and multi-day storage. (Viswanathan, 2022)

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PSH installations offer exceptional longevity, often exceeding 50 years. They also provide significant inertia and load balancing. (Tan, 2021) However, deployment is constrained by suitable geography, elevation, and water access. Long construction timelines and environmental permitting are also significant hurdles for any new PSH development. (Farivar, 2023)

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Compressed Air Energy Storage

Compressed air energy storage (CAES) stores energy by compressing air into underground caverns or pressure vessels and releasing it through turbines to generate electricity. This achieves a long cycle life, low self-discharge, and project lifespans of up to 60 years, making it an attractive option for large, long-duration energy storage. (Ahmed, 2023)

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A 100 MW, 10-hour system cost around $122/kWh in 2021. By 2030, optimized designs could reduce costs to just $18/kWh for 100-hour systems, making CAES one of the most cost-effective potential ESS technologies. (Viswanathan, 2022)

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CAES faces significant constraints due to the need for suitable geologic formations, such as salt caverns, for large-scale storage. (Kebede, 2022) Round-trip efficiency is lower than batteries, though adiabatic and isothermal systems are improving performance. Permitting and startup times also remain longer compared to battery technologies. (Tan, 2021)

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Hydrogen Energy Storage

Hydrogen energy storage generates hydrogen using electricity via electrolysis. The hydrogen is stored and used to generate electricity through combustion in turbines or through fuel cells. Hydrogen energy storage is useful in seasonal or 100+ hour storage, where other technologies are not cost-effective. (Tan, 2021)

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Capital costs are low for hydrogen ESSs, projected to reach as low as $15/kWh for a 100 MW, 100-hour system by 2030. (Viswanathan, 2022) However, hydrogen suffers from low round-trip efficiency, approximately 30 to 40%, and high levelized cost of storage. (Viswanathan, 2022)

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Infrastructure and safety also remain major hurdles. Storage requires compression or liquefaction, and hydrogen embrittles pipelines over time. Alternatives like ammonia and synthetic methane offer improved density but come with conversion losses and toxicity risks. (Farivar, 2023)

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Thermal Energy Storage

Thermal energy storage (TES) systems store heat, typically using molten salts or solid materials, for later conversion to electricity or for direct heating. TES systems are well suited for solar thermal plants and industrial heat recovery applications, offering scalable and cost-effective energy storage. (Tan, 2021)

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Molten salt TES systems cost approximately $295/kWh for an 8-hour configuration. (Viswanathan, 2022) Round-trip efficiency varies by design but can achieve seasonal retention with minimal losses of just 5 to 8% over several months with sufficient insulation. (Prieto, 2024)

TES performance depends heavily on tank assembly quality and insulation thickness. In well-designed systems, cooling rates can be as low as 0.21 °C/day. Though less mature than batteries for electricity-to-electricity storage, TES shows strong potential for hybrid use with concentrated solar power or long-duration heat storage in industrial settings. (Prieto, 2024)

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Behind-the-Meter Battery Storage

Behind-the-meter (BTM) battery systems are storage systems deployed at the residential and commercial levels. They are widely used with rooftop solar and in backup power applications. BTM storage accounted for 35% of global storage additions in 2023, making it an important factor to consider with regard to the entire grid. (IEA, 2024)

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A large network of distributed BTM systems can serve as a virtual power plant (VPP). A VPP can fulfill many of the functions of a centralized grid ESS, such as frequency regulation and demand response. Such solutions are already in place in markets such as California and Germany. (IEA, 2024)

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VPP growth depends heavily on regulatory frameworks, market participation rules, and aggregator compensation models. In markets with dynamic tariffs and advanced metering, value stacking from multiple services can make VPPs economically viable. However, operational complexity and investor uncertainty can limit scalability without strong grid integration policies. (Farivar, 2023)

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Grid Energy Storage Solutions Today and for the Future

Today, lithium-ion batteries offer an excellent balance of cost and performance for short-duration storage applications requiring a fast response. For medium durations, both flow batteries and thermal storage show promise despite current higher upfront costs. For long-duration storage, pumped storage hydropower remains the most cost-effective option, while both hydrogen and compressed air energy storage are viable future alternatives.

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No single technology can meet all of the energy storage requirements of a renewable grid. Applying each of these options based on the cost, duration, and scalability of any given application is key to achieving a resilient grid with high intermittent renewable adoption.

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References

Ahmed, S. (2023). Findings from Storage Innovations 2030 Compressed Air Energy Storage. U.S. Department of Energy.

Farivar, G. (2023). Grid-Connected Energy Storage Systems: State-of-the-Art and Emerging Technologies. PROCEEDINGS OF THE IEEE. 

Huang, Y. (2022). Key Challenges for Grid-Scale Lithium-Ion Battery Energy Storage. Advanced Energy Materials.

IEA. (2024). Batteries and Secure Energy Transitions. 

Kebede, A. (2022). A comprehensive review of stationary energy storage devices for large scale renewable energy sources grid integration. Renewable and Sustainable Energy Reviews.

Prieto, C. (2024). Use of molten salts tanks for seasonal thermal energy storage for high penetration of renewable energies in the grid. Journal of Energy Storage.

Tan, K. (2021). Empowering smart grid: A comprehensive review of energy storage technology and application with renewable energy integration. Journal of Energy Storage.

Viswanathan, V. (2022). 2022 Grid Energy Storage Technology Cost and Performance Assessment. U.S. Department of Energy.

Worku, M. (2022). Recent Advances in Energy Storage Systems for Renewable Source Grid Integration: A Comprehensive Review. Sustainability.