According to Moody’s Investors Services’ September 2015 report, “Batteries Charge Up For the Electric Grid,” many lithium-ion battery-storage applications could become economically viable by the end of the decade, as long as prices continue to fall. These applications include peak-shaving for commercial and industrial customers, grid storage to integrate renewables, and fast-response ancillary services.


According to the report, one significant key to continued price decline for these batteries is increased regulatory support, which is likely to trigger volume growth.


“Support can take the form of energy-storage mandates or subsidies that many states are currently promoting, chiefly California, New York and Hawaii,” the report states. “Federal regulations that permit batteries to provide grid ancillary services in the New York and PJM wholesale markets are another form of support.”


However, the growth in battery usage would not necessarily bode well for utilities in the long term, since utilities could face lower capacity prices if commercial and industrial demand for power drops during peak hours as a result of those entities relying on stored battery power during peak times, rather than purchasing power from their local utilities at peak rates.


Several things need to be taken into consideration in assessing the growing popularity of battery storage:


• The customer’s load profile: According to the report, batteries would be unsuitable for a customer with a relatively flat load profile, while economics would be better for a customer with a very high demand for a short duration and much lower demands for the rest of the day.


• Battery reliability: Before there can be widespread 
adoption, customers need to be assured that the batteries will provide power as seamlessly (quick shift from utility power to battery power) and as reliably as the local utility’s electric service.


• Customer capabilities: According to the report, “Peak shaving applications require customers to have energy management systems capable of shifting a portion of their demand seamlessly between batteries and the grid, or a customer might need to pay the battery installer to provide such management services.” This could mean new business for electrical contractors.


• Technical specifications: These include safety standards (including fire codes), which will need to be forthcoming before many customers will embrace large-scale battery technology. In addition, specifications will need to include high ramp up rates for certain industrial applications.