The FINANCIAL -- Electricity storage can be deployed throughout an electric power system—functioning as generation, transmission, distribution, or end-use assets—an advantage when it comes to providing local solutions to a variety of issues.

Sometimes placing the right storage technology at a key location can alleviate a supply shortage situation, relieve congestion, defer transmission additions or substation upgrades, or postpone the need for new capacity.

Some storage technologies are mature and fully commercial, such as pumped hydro and thermal storage. Others are still evolving in terms of technology and their economic and operational roles in the power grid, such as battery storage or flywheels. According to EIA, the costs can be significant when it comes to energy storage, particularly with emerging technologies. On the other hand, electricity storage technologies offer price arbitrage opportunities and fast-response services that conventional technologies cannot match. The future application of storage technologies will depend on how rapidly the technologies improve and costs drop, the implementation of new pricing and valuation schemes for the services storage can provide, and the cost and efficiency of alternatives.

The Seneca Pumped Storage Generating Station in northwest Pennsylvania takes advantage of the local topography by filling a reservoir at a higher elevation than the dam below. The facility can be operated purely as a 435-MW hydroelectric power plant, generating power to supply demand for electricity, or as a pumped storage facility, providing energy management and load leveling services while taking advantage of differences in the wholesale price of electricity over the course of the day or the week.

Overnight, a reversible hydroelectric turbine is powered by low-cost electricity from the grid, pumping water from the lower reservoir behind the dam up to the upper reservoir on the bluff (left). During the daytime peak hours, this water is then released back "downhill" and through the hydroelectric turbine to produce electricity, which is sold to the grid at the higher, on-peak prices.

Pumped storage is a long-proven storage technology, however, the facilities are very expensive to build, may have controversial environmental impacts, have extensive permitting procedures, and require sites with specific topologic and/or geologic characteristics. As estimated in a report commissioned by EIA, the overnight cost to construct a pumped hydroelectric plant is about $5,600/kW, higher than the $3,100/kW for a conventional hydroelectric plant. A conventional natural gas combustion turbine, which might be used to supply the peak daytime power added by the pumped storage plant, is $1,000/kW, though hydroelectric operating costs are much lower than those of a combustion turbine.

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