Energy storage gives utilities, power marketers and large commercial or industrial customers the flexibility to respond to power shortages, price spikes or brownouts. Utilities, for instance, must precisely measure their load generation with the demands of their end users -- a difficult task given that energy usage fluctuates, particularly at industrial sites that routinely implement new processes. Without adequate generation capacity, all wholesale buyers of electricity would be subject to the whims of the market.

"Storage systems are real," says Matt Johnson, director of business development for Gaia Power in New York City, which is working with Southern California Edison (SCE) on its pilot project. "The batteries store base-load output and release that energy when they have trouble meeting peak demand. We have seen interest from other utilities. SCE should roll out its project this summer. There are not many utility installations to date. But battery technologies are improving in terms of cost and functionality. As prices come down, there will be greater calls for energy storage."

Utilities sometimes have excess generation and distribution services that serve to back-up the system in case of a failure, or during periods of peak demand. The reality is that those assets are often underutilized because they may only run at capacity for a fraction of the day -- or year. A storage device could enhance the performance, for example, by putting less strain on the system. In other words, users can power-up with the "battery" instead of directly from the grid that might have its resources tapped at a given time.

The market potential, according to the U.S. Department of Energy, is $3 billion to $5 billion a year. Besides utilities, businesses might also benefit. They could hook up the batteries at night and use them during the day when demand on utilities is highest. Or, conversely, residential users may find such systems worthy, says Gaia Power. That's because the storage systems charge off the grid and discharge when there is an outage, producing less noise and fewer emissions than individual generators.

Game Changer

To be sure, the technologies to allow for energy storage are in their infancies. And, even if they can be shown to work, there are still downsides to using them. At this point, it is difficult to gauge just how efficient such devices are as well as the potential environmental effects. It's a technology, for example, that gets its energy supply from a generation source and must therefore be used in combination with either central or distributed generation resources. At the same time, batteries are now relatively expensive and have a limited life expectancy.

According to the Energy Department, the technology has a lot of market potential and environmental benefits. It can help utilities avoid downtime and thereby save billions in repairs and lost opportunities while also allowing such companies to sell blocks of peak power at premium prices. Environmentally, it will facilitate the development of more wind and solar power that is not always available but which -- through storage devices -- can be bottled and then subsequently discharged when needed.

"The prognosis is that several utility companies are beginning to find that energy storage can be cost effective in certain applications and certain locations," says John Boyes, manager of energy storage at distributed energy resources at Sandia National Laboratories, in a phone interview. "It is coming and it will change the way utilities and electric consumers do business."

Besides those projects being facilitated by the California Energy Commission, Boyes points to those being developed by American Electric Power and the Long Island Power Authority. The former is doing so to defer an upgrade. AEP, meantime, is discussing how to expand the concept and will likely do so in the next three years, adds Boyes.

For its part, the California Energy Commission has called new energy storage a "high priority." It says that the technology will play a pivotal role in the state's pursuit to become a leading provider of renewable energy sources.

According to Ed Kjaer, director of electric transportation at SCE that is part of the energy commission's initiative, the utility expects there to be 5 million advanced meters in its service territory by 2012. That technology will work in conjunction with "battery packs" that recharge at night via the grid and then release that power during the day to help it meet peak energy demand.

"Energy storage is a game changer," says Kjaer, in a talk with this writer. "As the batteries mature, the utility industry will be able to use energy storage for several applications." That includes powering anything from cars to homes and businesses.