THE ECONOMICS OF BATTERY ENERGY STORAGE

This technical appendix from RMI provides a detailed overview of thirteen services that battery energy storage can provide to customers, Independent System Operators (ISOs), Regional Transmission Organizations (RTOs), and utilities. It categorizes these services by stakeholder benefit and time scale, providing definitions, technical backgrounds, and estimated value ranges for each. The document also details the valuation and dispatch methodologies used in four specific use cases across the U.S. and includes a meta-study of six influential energy storage valuation publications from the past decade.

• Energy storage can provide thirteen distinct services categorized by the primary beneficiary: customers, Independent System Operators (ISO) / Regional Transmission Organizations (RTO), and utilities.
• Frequency regulation is highly suited for battery storage due to fast ramping capabilities, and FERC Order 755 has increased its financial attractiveness by requiring performance-based compensation based on accuracy and speed.
• There is a risk that market-clearing prices for frequency regulation could collapse if energy storage saturates the market, because storage does not have the opportunity costs associated with traditional generators.
• Transmission and distribution (T&D) upgrade deferral is one of the most valuable services for energy storage, as it allows utilities to avoid large lump-sum investments by managing peak demand events that occur only a few hours per year.
• Behind-the-meter (BTM) storage provides direct monetary savings to customers through time-of-use (TOU) bill management, increased PV self-consumption, and demand charge reduction, while simultaneously benefiting the grid by smoothing the building's load profile.
• Energy storage can support grid restoration through 'black start' services, either by being colocated with power plants or by being positioned along 'cranking paths' to energize larger generation facilities during a total grid outage.
• For commercial demand charge reduction, electric vehicles with bi-directional chargers are currently a more cost-effective approach than stationary storage, as as little as 30 minutes of storage can be sufficient.
• The document outlines specific capital cost assumptions for its use cases: commercial systems are estimated at $500/kWh and $1,036/kW, while residential systems are $500/kWh and $1,151/kW.

APA

RMI (n.d.). THE ECONOMICS OF BATTERY ENERGY STORAGE. https://rmi.org/app/uploads/2017/05/RMI_Document_Repository_Public-Reprts_RMI-TheEconomicsOfBatteryEnergyStorage-Appendices.pdf

Chicago

RMI. THE ECONOMICS OF BATTERY ENERGY STORAGE. n.d. https://rmi.org/app/uploads/2017/05/RMI_Document_Repository_Public-Reprts_RMI-TheEconomicsOfBatteryEnergyStorage-Appendices.pdf.

Wikipedia

{{cite report |author=RMI |title=THE ECONOMICS OF BATTERY ENERGY STORAGE |url=https://rmi.org/app/uploads/2017/05/RMI_Document_Repository_Public-Reprts_RMI-TheEconomicsOfBatteryEnergyStorage-Appendices.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{rmindeconomics, author = {{RMI}}, title = {{THE ECONOMICS OF BATTERY ENERGY STORAGE}}, institution = {RMI}, url = {https://rmi.org/app/uploads/2017/05/RMI_Document_Repository_Public-Reprts_RMI-TheEconomicsOfBatteryEnergyStorage-Appendices.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }