THE ECONOMICS OF BATTERY ENERGY STORAGE

The report categorizes battery energy storage services into three stakeholder groups: ISO/RTOs, utilities, and customers. It details the technical application and economic value of services such as frequency regulation, resource adequacy, and demand charge reduction. The document includes a meta-study of six major energy storage valuation publications and outlines specific use-case assumptions for commercial and residential systems in San Francisco, New York, and Phoenix.

• Energy storage can provide thirteen distinct services categorized by the primary beneficiary: customers, Independent system operators (ISO) / regional transmission organizations (RTO), and utilities.
• Battery storage is highly effective for frequency regulation due to fast ramping capabilities, and FERC Order 755 has shifted compensation toward performance-based metrics that financially favor batteries.
• 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 same opportunity costs as traditional generators.
• Utilities can use energy storage to defer or avoid expensive transmission and distribution upgrades by shaving peak loads, which often only exceed capacity by 1–3% for a few hours per year.
• Behind-the-meter storage allows customers to reduce electricity bills through time-of-use (TOU) management, demand charge reduction, and increasing the self-consumption of solar PV.
• Electric vehicles with bi-directional chargers are identified as a more cost-effective method for commercial demand charge reduction than stationary storage, requiring as little as 30 minutes of storage.
• Energy storage can support 'black start' grid restoration by being colocated with power plants or placed along 'cranking paths' to energize larger generation facilities during a total grid outage.
• The report's financial modeling for use cases assumes a third-party ownership model with a 6.77% Real WACC and a 20-year financial life, with battery replacements scheduled for year 7 and year 14.

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} }