If battery suppliers, utilities, and regulatory agencies can address challenging business, operational, and policy issues, residential energy storage systems will help improve the cost-effectiveness, reliability, resilience, and security of the electrical grid.
Residential energy storage systems have attracted significant attention from the industry and media in the power sector. This attention has primarily been focused on utility-scale battery energy storage systems and battery energy storage systems for commercial and industrial customers. While these large-scale battery energy storage systems are a critical part of the storage market, the rapid growth of residential energy storage has surpassed expectations, and residential energy storage systems may become important assets sooner than many people anticipated, warranting further research on their impact on residential users and grid growth trajectory and potential values. So, how can these residential energy storage systems help local utilities improve the cost-effectiveness, reliability, resilience, and security of the electrical grid?
Many utilities are taking active measures to improve the reliability and resilience of the electrical grid. Some utilities have already implemented what are known as demand response programs that encourage customers to reduce consumption during peak demand periods. Similarly, utilities are seeking comprehensive grid modernization plans to increase capacity and enhance grid security. Some utilities are making significant investments in utility-scale storage solutions, deploying large battery energy storage systems near power plants, transmission lines, and substations to lower costs and improve reliability.
With more and more users investing in residential energy storage systems on the customer side, utilities gain another potential lever to balance energy demand and supply. Residential energy storage systems can be interconnected to provide support services to the electrical grid, similar to how utilities currently use demand response programs and ancillary service resources. Given the deployment of battery energy storage systems, the marginal cost of dispatching residential energy storage may be low. This would help utilities avoid costly remedies such as deploying inefficient peaker plants or building additional grid infrastructure that may not be used frequently.
Integrating residential energy storage systems into an efficient and dispatchable grid is not easy. But there is evidence that it can be done. Some states in the United States have already launched pilot programs that allow utilities to use some stored power from residential users during periods of power system stress and reimburse these residential users for the electricity.
To support market development, regulatory agencies and utilities need to evaluate how and where residential energy storage systems can support the grid and incorporate their assessments into utility resources and grid planning approaches. Regulatory agencies can also consider fine-tuning battery rate structures and other compensation mechanisms and explore how to integrate battery energy storage systems into system designs. Similarly, grid operators for residential energy storage need to ensure that customers have purchased and are using batteries to support the grid, and provide electricity to the local utility when the grid needs support.