Battery Storage Enables Grid Transition

From IEEFA analysts Dennis Wamsted and Seth Feaster

Battery storage is about to transform operations on the U.S. power grid.

The installed capacity of utility-scale battery storage, expected to reach 18,159 megawatts (MW) at the end of 2023, is projected to more than double in the next two years to
40,673 MW, according to data from the Energy Information Administration (EIA) on planned installations through 2025. This rapid expansion will have major positive ramifications for grid operations and the deployment of renewable resources, especially utility-scale solar.

Much of the growth will occur in California and Texas, the country’s two largest power consumers, where more than 19,000 MW of battery storage capacity is expected to come online in the next two years. Texas is expected to lead the nation with 11,790 MW of new battery capacity, while California is expected to add 7,321 MW. This growth will extend the beneficial impact of battery storage already evident in grid operations.

In California, for example, battery storage is being used to soak up solar generation during high production hours and return that power to the grid in the mornings and evenings, helping to ease ramping requirements for gas-fired generators and provide needed capacity at peak demand times. The California Independent System Operator (CAISO) last year credited battery storage for playing a key role in meeting demand during a 2022 heat wave when installed capacity was just 4,200 MW. 

Graphic by IEEFA Energy Data Analyst Seth Feaster   

The change in the past year has been significant. Installed capacity is now 70% higher,
at 7,188 MW, and the impact batteries are having on the grid’s daily operations is increasingly evident. On Jan. 7, 2024, for example, batteries supplied more than 10% of CAISO’s load for a four-hour period from 4:35-8:40 pm. During that period, batteries were frequently the state’s second-largest supply resource.

Similar trends are becoming apparent in Texas, where installed storage now totals
5,950 MW. Last summer, when high loads and outages at coal and gas power plants stressed the system, storage played a key role in meeting demand, pumping 1,800 MW into the grid during an Aug. 17 event and 2,100 MW on Sept. 6. Local grid experts said these megawatts were essential to keeping the system running without having to resort to emergency operating conditions.

While the transition is being led by California and Texas, EIA’s data shows battery storage installations are planned in 29 states over the next two years. Duration—the number of hours that batteries can deliver their power—is also growing.

In addition to time-shifting renewable generation, battery storage can relieve transmission line constraints; substitute for expensive, polluting fossil fuel peaking power plants; and provide grid stability through rapid frequency response, among other benefits.

Battery storage’s various system-wide attributes are going to result in dramatic changes in the power sector in the coming years and play a key role in enabling the transition away from fossil fuels.

Renewables Overtake Coal

Soon enough, this entire bar chart will be green, as renewable generation continues to climb while coal declines. Read our latest analysis on the accelerating energy transition. 

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Want to dive deeper into the numbers?
Email Dennis Wamsted (dwamsted@ieefa.org) with questions or comments.