	Background

This section describes (1) electricity grid functions, operations, and  planning; (2) energy storage operational characteristics, technologies,  and deployment; and (3) the electricity regulatory framework. These markets  include  capacity markets—auctions through which owners of power plants  can be compensated for agreeing to make their plants available to  provide electricity at a specified time in the future—designed to  incentivize the building and retention of enough generation and other  resources to meet future power demands; energy markets for scheduling which power plants will generate  electricity throughout the day to maintain the balance of electricity  generation and consumption, and at what prices; and ancillary services markets, which are designed to maintain electric  reliability and ensure that supply and demand remain in balance from  moment to moment so that grid operators can deliver electricity within  technical standards, such as at the right voltage and frequency. Energy Storage Can Be Used in Various Ways to Enhance the Reliability, Resilience, and Efficiency of Grid Operations

Energy storage can be used in various ways to enhance the reliability,  resilience, and efficiency of grid operations, according to studies we  reviewed and stakeholders we interviewed. Storage can be deployed  throughout the electricity system and act as a generation, transmission,  distribution, or customer-sited asset to provide various services, address  operational challenges and needs, and potentially reduce costs. For  example, storage can help grid operators address supply disruptions,  relieve transmission congestion during periods of high demand, defer the  need for transmission or distribution system upgrades, and provide  backup power during a power outage. Figure 6 illustrates examples of  potential applications across the electricity grid. Grid operators are adopting  storage to support increasing use of renewable energy and address the  associated challenges. Various Factors Affect the Deployment of Storage for Grid Operations, Including Industry and Technology Readiness, Cost- Competitiveness, and the Regulatory Environment

Studies we reviewed and stakeholders we interviewed identified a variety  of factors that affect energy storage deployment. These factors include  industry and technology readiness, safety concerns and stringency of  siting requirements, increasing use of renewable resources, the cost- competitiveness of storage and challenges with quantifying the value of  storage, and the regulatory environment. Industry and technical challenges affecting deployment of storage include  uncertainty about the performance of certain storage technologies over  time and in various operating conditions. Limited information on cost. Various Federal and State Policies and Other Efforts Aim to Encourage the Deployment of Energy Storage and Address Market Barriers

Federal and state policymakers have used a variety of policies and other  efforts to encourage the deployment of storage and address market  barriers. In addition, FERC has taken steps to address  market barriers to storage deployment in wholesale markets but the final  impact of these steps depends on implementation by RTOs. DOE’s Energy Storage Program’s research and development  activities focus on improving materials and system factors that affect  the cost, efficiency, and capacity of certain energy storage  technologies, including flow batteries. Appendix I: State Policies and Other Efforts Encouraging Deployment of Energy Storage

Through interviews with stakeholders and our review of documents, we  identified examples of policies and other efforts that have encouraged the  deployment of energy storage or aim to address market barriers,  including the establishment of mandates and targets for storage adoption,  the revision of interconnection rules and planning requirements, financial  incentives, and funding.
Why GAO Did This Study

Power plants' electricity output must be matched continuously with demand, which varies depending on the time of day and year. To maintain a reliable supply of electricity, operators of the electricity grid—a complex network of power plants and power lines managed by utility companies and other operators—take steps to ensure power plants are available to generate electricity when needed. Increasingly, renewable sources of energy, such as solar and wind, are being integrated into the grid.
Energy storage allows for electricity to be stored and used later when it is needed and could change the operating capabilities of the electricity grid. Batteries and other energy storage technologies can store energy in one form—such as chemical, mechanical, or thermal energy—and transform that energy to generate electrical power at a later time.
GAO was asked to provide information on the role of energy storage in grid operations. This report describes (1) how energy storage can be used to enhance grid operations and performance; (2) factors that affect the deployment of energy storage for grid operations; and (3) federal and state policies and other efforts that address the deployment of energy storage. GAO reviewed studies published from 2012 through 2017; and interviewed 41 stakeholders, including officials from government agencies and representatives of industry and other groups based on their knowledge of energy storage and grid operations.

What GAO Found

Energy storage can be used in various ways to enhance the reliability, resilience, and efficiency of grid operations, according to studies GAO reviewed and stakeholders GAO interviewed. Such storage can be deployed throughout the electricity system and act as a generation, transmission, distribution, or customer-sited asset to provide various services, address operational challenges and needs, and potentially reduce costs, as shown in the figure below. For example, storage can help grid operators address supply disruptions and the variability of renewable energy resources, such as solar and wind; relieve transmission congestion; defer the need for transmission or distribution system upgrades; and provide backup power during a power outage.
Examples of Potential Storage Applications on the Electricity Grid
Various factors affect energy storage deployment. These include industry and technology readiness, safety concerns and stringency of siting requirements, increasing use of renewable resources, cost-competitiveness of storage and challenges with quantifying the value of storage, and the regulatory environment, according to studies GAO reviewed and stakeholders GAO interviewed. For example, industry and technical challenges include uncertainty about the performance of certain technologies over time and in various operating conditions.
Federal and state policymakers have used various policies and other efforts to encourage the deployment of storage and address market barriers. For example, the Department of Energy has undertaken various efforts, including research and development focused on improving factors that affect the cost and capacity of certain storage technologies. In addition, the Federal Energy Regulatory Commission has issued proposed and final rules to address market barriers to storage deployment in wholesale markets. Lastly, state policies and other efforts that aim to encourage the deployment of storage or to address market barriers include establishing mandates and targets for storage adoption, revising planning requirements, and offering financial incentives and funding.