Battery systems on the U.S. power grid are increasingly used to respond to price

According to the early release of our Annual Electric Generator Report, the capacity of utility-scale battery storage more than tripled in the United States during 2021, from 1.4 gigawatts (GW) at the end of 2020 to 4.6 GW. The survey asked respondents how they use batteries, and respondents could cite more than one application for a system. Although battery systems have several common applications, more systems are increasingly used to store electricity when prices are low and discharge electricity when prices are high, a strategy known as price arbitrage.

During 2021, 59% of the 4.6 GW of utility-scale U.S. battery capacity was used for price arbitrage, up from 17% in 2019. In certain markets, price arbitrage is more common than in others. For example, more than 80% of the battery capacity added in 2021 in the California Independent System Operator service territory was used for price arbitrage.

Batteries also help maintain grid reliability. For example, batteries used to regulate frequency—still the most common battery application in the United States—help maintain the grid frequency of 60 cycles per second. Deviations from that frequency could lead to power surges or other types of grid instability. Batteries are well suited for frequency regulation because they do not require any startup time, and they can quickly absorb power surges.

Similarly, batteries that help ramp generation and provide spinning reserve can balance electricity supply and demand for periods ranging from a few seconds to a few hours, depending on the requirements of changing electricity demand and generator outages.

Batteries can also counter excess wind and solar generation in some markets. To do this, batteries absorb excess solar or wind generation when demand is low and then discharge it later when demand is high. Battery storage is often paired with renewable sources in the United States; more than 93% of the battery capacity that came online in 2021 was co-located with solar power plants.

Principal contributors: Glenn McGrath, Owen Comstock