The Installation of a Distributed Energy Storage System

The Installation of a Distributed Energy Storage System

distributed energy storage system

The Installation of a Distributed Energy Storage System

Energy storage helps level electricity demand across the grid, avoiding price spikes for consumers. These spikes occur during peak energy demand, usually in cities and often affecting low-income communities.

Unlike traditional power plants, these storage systems can be aggregated to form virtual DERs that are viewed by the utility as one large resource. However, there are cost, business model, and regulatory barriers that must be overcome to make these technologies a major part of the US grid.


The use of energy storage can improve the efficiency of the grid by allowing more renewable generation to be integrated. It can also help to reduce distributed energy storage system greenhouse gas emissions by eliminating the need for new pollution-emitting peak power plants. Furthermore, it can increase reliability in remote communities that are farther away from the electrical grid by providing backup power.

Energy storage can provide many benefits to utilities, including reducing costs and providing new revenue streams. These benefits can be derived from a variety of services, such as peak shaving, demand response, voltage support, and system resiliency. It can also help to defer the need for costly transmission and distribution infrastructure upgrades.

In addition to lowering utility costs, a distributed energy storage system can reduce commercial electric demand charges, resulting in significant savings for building owners. In many cases, these charges account for 30%-70% of overall electricity costs. Strategically deploying energy storage can help to reduce these costs by discharging electricity during the highest energy usage periods.

Currently, most energy storage systems are deployed on a centralized basis and operate in a retail electricity market with ancillary services like demand response and balancing. However, a distributed energy storage system can be more cost-effective and operate closer to the point of consumption. For example, a home PV-battery can be coordinated by third-party aggregators to optimize its value under time-of-use pricing schemes. Similarly, flywheel short-term storage devices with a capacity of a few kilowatts can be combined to form large facilities that offer a range of services.


The costs associated with energy storage are dropping faster than expected. The price decline has been driven by factors including the global demand for electric vehicles, which has fueled investments in battery-pack manufacturing and compressed profit margins. In addition, the cost of other hardware has dropped as manufacturers have refined designs and leveraged economies of scale. Meanwhile, the costs of “soft” tasks such as customer acquisition, engineering, and permitting have declined as companies have streamlined their processes.

Energy storage has also helped utilities mitigate transmission constraints. Xcel Energy, for example, has used solar energy/storage to level load on the system during periods of peak demand, which typically occur diurnally. This reduces the burden on utility grid equipment and saves the company money on transmission upgrades. In addition, the technology can help utilities meet load during a shorter period of time, which is particularly beneficial in space-constrained areas where conventional distribution upgrades would be difficult to site.

To minimize losses, energy storage should be located as close as possible to the point of delivery. This can be achieved by increasing the size of existing lines, reconducting them, or siteing distribution transformers closer to the load centers. However, these solutions will still suffer from round-trip efficiency losses. Utilities should evaluate the total cost of the solution on a risk-adjusted basis, taking into account the impact of technology choices and power flow modeling.


The installation process for a distributed energy storage system can be complex and time-consuming. It requires careful planning to ensure the safety of customers and the reliability of the system. The installation process also includes testing and verification of the system. This is essential to determine whether it meets its intended purposes. The installation process also involves integrating the batteries with the distribution system. This can be difficult to do because the majority of the distribution system is underground. Hellman notes that it can cost up to $1 million per city block to upgrade the existing infrastructure, which would require shutting down the entire block for several weeks or months.

In addition to deploying front-of-the-meter and behind-the-meter battery systems, O&R is exploring innovative business models for storage. In 2022, the utility will establish an Energy Storage Organization to develop an enterprise-wide storage strategy and implementation plan. This will include analysis, policy and project management functions, engineering, construction, and maintenance personnel.

In 2022, CECONY plans to deploy a utility-owned 7.5 MW / 30 MWh battery energy storage system on the site of its former Poletti gas turbine in Queens to provide grid support services and market services to NYISO. The utility-owned battery will provide system support by absorbing power during periods of high customer solar output and replacing temporary fossil generators needed for contingency service. The battery will also be used to earn revenue in the NYISO electricity markets.


Energy storage systems require regular servicing to ensure that they operate safely. The maintenance procedures vary from system to system, but it is important to follow best practices when maintaining a distributed energy storage system ESS. It is also a good idea to take out insurance policies in case of damage or loss. This will help reduce costs and make financing new projects easier.

Many projects are under development to develop large ESSs. For example, the US generator AES has a 10 MW/5 MWh battery at its Kilroot power station in Northern Ireland that uses lithium-ion batteries and can respond to grid changes in under a second. It is the largest advanced energy storage system in the UK and Ireland.

In 2015, lithium-ion batteries accounted for 51% of newly-announced ESS capacity and 86% of deployed ESS power capacity (Navigant Research). Lithium-ion technology is also more cost-effective than sodium-sulfur or lead-acid batteries.

Some ESSs are integrated with solar PV and use smart inverters to control the grid-forming and back-up functions. Other ESSs are used for energy and ancillary services in wholesale markets. In California, PG&E has an 18-month technology demonstration using its Vaca-Dixon and Yerba Buena sodium-sulfur battery systems to offer energy and ancillary services in the CAISO market.

Some of these ESSs are shared by multiple users and consumers. This helps lower the overall cost of the system, which can save money for consumers and increase the efficiency of a utility’s fleet. Rahbar et al have developed an algorithm to optimize the amount of energy charged and discharged in these systems to maximize consumer benefit.