Utilities Report Arbitrage as Primary Use of Battery Storage: EIA

Electric utilities are increasingly using batteries to move electricity from periods of low prices to periods of high prices, a strategy known as arbitrage, according to a June 25 report published by the U.S. Energy Information Administration.

Utilities state that arbitrage is the most common use case of battery storage with 10,487 MW of battery capacity reported to be used for arbitrage purposes. As part of the arbitrage process, utilities charge batteries by buying power during low-cost periods and then sell that electricity when electricity prices rise. Batteries allow electricity to be stored during periods of high supply and then utilized during periods of low supply.

U.S. electric utilities by the end of 2023 reported operating 575 batteries with a total capacity of 15,814 megawatts (MW). The agency projects U.S. battery capacity will increase more than threefold, adding 35,953 MW by the end of 2028. These projections are based on plans reported by U.S. utilities.

According to a report issued by the agency in February, solar and battery storage are projected to make up 81 percent of new U.S. electric-generating capacity in 2024. U.S. battery storage capacity is expected to nearly double in 2024, as developers plan to add 14.3 GW to the existing capacity of 15.5 GW this year. Battery storage is also projected to set a record for annual capacity additions in 2024. The U.S. is expected to add 62.8 gigawatts of new utility-scale power generating capacity in 2024, up 55 percent compared to 2023.

Battery storage is also used by utilities to enhance grid reliability with services that support the transmission of electricity, called ancillary services. The ability to have electricity in storage allows the grid to be more reliable and reduces price volatility experienced by consumers.

Battery storage can be used to shift power consumption from times of high demand to low demand. Battery storage systems allow energy from renewable sources such as solar and wind to be stored and then released when demand is at its highest.