(REPOST: Forbes)

In 2017, utility-scale energy storage moved from a handful of experimental programs to front-page news, with prominent deployments in Australia, Texas, Southern California, and hurricane-ravaged Puerto Rico.

Building on these successful installations, 2018 should be an even more important milestone for energy storage, as policymakers encourage electricity system operators to include storage in their integrated planning. Regulators will also need to clarify the market rules around energy storage, to allow utilities and other storage operators to “stack” ancillary services on top of storage, as the California Public Utilities Commission (CPUC) recently did.

Energy storage will affect the entire electricity value chain as it replaces peaking plans, alters future transmission and distribution (T&D) investments, reduces intermittency of renewables, restructures power markets and helps to digitize the electricity ecosystem. For utilities, battery storage will become an integral tool for managing peak loads, regulating voltage and frequency, ensuring reliability from renewable generation, and creating a more flexible transmission and distribution system. For their customers, storage can be a tool for reducing costs related to peak energy demand.

Driving all of this opportunity is the decreasing cost of battery storage, a factor largely of the rapid increase in their development and manufacture of batteries for electric vehicles. Research by Bain & Company estimates that by 2025 large-scale battery storage could be cost competitive with peaking plants—and that is based only on cost, without any of the added value we expect companies and utilities to generate from storage. In some markets, renewables combined with battery storage already cost less than coal generation.

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