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Primers: Energy Storage

Wendefurth pumped storage hydro facility in Germany – Photo: Vattenfall


There are a number of drivers that are pushing the development of storage technology. The ability to store electricity cost effectively will support the uptake of variable renewables and on-site generation. Electrical storage is also a key component in the electrification of transportation. Thermal storage is already being deployed in heating and cooling networks, and further advances in this area are expected to increase efficiencies and reduce costs. Thermal energy can be stored in a wide variety of materials such water, rocks, compressed air, and molten salt. Surplus electrical energy can be stored in batteries, or can be used to pump water in periods of surplus or at low price points to fill the reserve at the top of a hydro facility, ready for use during periods of higher demand. Storage is widely considered key to unlocking the full potential of renewable energy because it allows energy to be produced when it is available and used when it is needed.

Legislation and Policy

Support for deployment of storage technologies is focused primarily in two areas: research and development at early concept stage and at the demonstration and commercialization stage for more mature technologies. Tax breaks, grants, funding, and venture capital can be mobilized by governments to help bring these technologies to the market. Government support of demonstration projects can help move projects from the conceptual stage to commercialization. Demonstrated performance and data are needed to attract investors and to drive integration of storage into energy systems.

At other policy levels, price incentives, such as on-peak and off-peak pricing for storage, can be created. Advanced electricity markets are introducing price incentives for balancing and storage capabilities. Reducing regulatory barriers to the use and storage of waste heat also plays an important role in enabling storage.

Building Political and Citizen Will

Storage can play a key role in improving the resilience of local heating and cooling and electricity networks. The City of Presidio, Texas has one of the largest battery storage systems in the US. It is a four-megawatt sodium-sulfur (NaS) battery system(nicknamed ‘Bob’) to maintain reliability for up to eight hours, which is critical given the city’s frequent power interruptions and outages. The cost of the system is shared across all ratepayers and provides a very clear example to the community of how storage can be an essential component of keeping the lights on.

Battery storage in Presidio, Texas - Photo: Brad Newton

Battery storage in Presidio, Texas – Photo: Brad Newton

Finance, Investment and the Business Case

Perhaps more than any other technology that plays a role in transition to 100% renewables, the business case for storage is still centered around venture capital at the demonstration funding stage. Existing technologies are  demonstrating a performance track record and new technologies, that are at the conceptual or trial stages, are being introduced to the market on a regular basis. It is not yet clear whether it will be a single breakthrough technology or design or a combination of storage technologies that will provide the turnkey storage solution, but, the appeal for investors is the potential return. Backing the right venture  will likely be significant given the role that storage is expected to play in the transition to 100% renewable energy.

Storage projects can take advantage of differences in the price of energy at different times during the day. Power produced during periods of low energy prices (in times of of low demand or surplus generation) can be stored and sold later during periods of higher energy prices. For example, surplus wind energy generated at night when demand is low can be stored and sold during periods of peak demand in the morning and evening hours when demand is high. Differences in on-peak vs. off-peak can be significant in some jurisdictions, therefore providing an attractive opportunity to investors.

Technology and Infrastructure

Storage has an important role to play in the viability of renewable energy produced from variable sources. It provides an energy sink at times of excess supply and smooths the supply curve; power is provided continuously rather than only when the sun is shining or the wind is blowing, for example. Also under development is seasonal storage, which captures the heat or cold from one season and stores it for use in the next. Storage can be located close to generation or where storage resources are more readily available. Norway, for example, provides around half of Europe’s total energy storage capacity through pumped hydro, allowing power produced during times of surplus generation to be stored for use when it is needed, on a daily or seasonal basis.

Thermal storage can have many different applications, depending on the need and the resources available. For example, a significant amount of heat is wasted in our built environments, especially in the context of cities, and through commercial and industrial activities and this heat can be captured and stored and consumed later for heating and cooling or converted to electricity, such as in cogeneration (combined heat and power) systems. Waste heat from sewage systems, for example, is captured and stored for use by the City of Vancouver’s neighbourhood energy utility as a renewable, reliable energy source. In France, the thermal energy storage capacity in existing electrical water heaters is currently responsible for reducing the nation’s winter peak electricity demand by an estimated 5 GW (5%), by timing the generation of hot water with off-peak hours.