SHAPING A BETTER WORLD

Future of Energy 2035

What will a future US energy storage look like?

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 OVERVIEW

The future of energy storage

The US energy market is in the midst of a fundamental

shift; transitioning from a traditional supply and demand
model to a much more complex market of distributed
energy resources, intermittent generation capacity and
empowered energy consumers. Enabling this transition in
large part is the growing role of energy storage.

This perspective piece has been written as if it This transition will continue to expand as
were now the mid-2030s and summarizes how energy storage technologies continue to
the energy transition specifically regarding evolve, while prices decrease. As of 2019, the
energy storage technologies took place over the majority of the US population now resides in
previous 15-20 years. states with 100% clean or renewable energy
goals and legislation, including 24 states and
As of 2019, the US has nearly 900 MW of
Puerto Rico2. The transition to renewable and
installed utility-scale battery storage, and this
clean energy sources will be coupled with the
is expected to rise to 2,500 MW by 20231. By
expansion of energy storage options.
2050 the US is expected to have 17-98 GW of
battery storage capacity.
1 - Utility Scale Battery Storage, US EIA
2 - Weiss & Hagerty, 2019

350,000,000

300,000,000

250,000,000

Population
US Total Population (+Puerto Rico)

200,000,000
Legislation Study

150,000,000 Legislation Anticipated

100,000,000 Legislation Introduced

Legislation Enacted
50,000,000

0
Population w/ 100% Clean US Total Population
or Renewable Legislation

Figure 1. 2019 US Population of States with 100% Clean or Renewable Energy Legislation

E NE RG Y SY ST E M S IN 2 0 3 5 3
CONTEXT

What will the future of energy

storage in the US look like?

By 2035 the US energy market has significantly ramped

up distributed energy resource deployment and utility-
scale renewable generation. All regions of the US have seen
substantial growth, enabled in large part by wide-spread
adoption of energy storage technologies. Technological
advances, a large decrease in storage cost and favorable policy OFFSHORE

frameworks at the state, regional and federal level have all

S U B S TAT I O N
H Y D R O LY Z E R
OFFSHORE E L E C R O LY S E R

contributed to high market penetration. RENEWABLES

HYDROGEN
Behind-the-meter (BTM) and front-of-meter Batteries have proven to be effective for load STORAGE

(FOM) distributed storage capacity has grown shifting and resilience with additional storage H 2 / N AT U R A L G A S
FA C I L I T Y
significantly from its early years as highly strategies being employed to provide demand N AT U R A L G A S
PIPELINES
ONSHORE
subsidized combined power purchase agreement and grid support services across the various RENEWABLES

tenders. These nascent programs introduced regions. Accelerated electrification in the PEAKER
PLANTS N AT U R A L G A S

by utilities to address residential, commercial Northeast put stress on the existing electricity
STORAGE

and industrial demand have led to advances grid as winter demand more than doubled, A D VA N C E D
NUCLEAR
in grid-based communication software and but a combination of large-scale BESS and UTILITY SCALE
B AT T E R Y S T O R A G E
updated business models, turning previously the introduction of commercial electrolysis to
discontinuous storage assets into dispatchable produce storable hydrogen gas was employed to
energy hubs. The creation of virtual power meet the region’s needs. In the Western United VEHICLE 2 GRID

plants that can also maximize Internet of Things Stated, climate risks such as the increased
DISTRIBUTION TRANSPORT
(IoT) networks has dramatically enhanced frequency of wildfires and subsequent Public GRID
R E S I D E N TA L
utilities’ ability to meet the needs of intermittent Safety Power Shutoffs, have been mitigated
renewable generating systems. in large part by the adoption of public-private
partnerships to fund distributed battery storage DISTRIBUTION
At the utility development scale, a wider range G E N E R AT I O N
systems. Adoption of these partnerships across
of industrial battery energy storage systems
the country provides community resilience from
(BESS) technologies have been incorporated INDUSTRIAL
flooding in the South, tornadoes in the Midwest, COMMERCIAL &

to help balance the grid. Commercial solar, GOVERNMENT

hurricanes along the East Coast, and heatwaves HI RISE RESIDENTIAL

onshore-, and offshore-wind power plants are DISTRIBUTION
throughout the country B AT T E R I E S
now regularly coupled with large-scale storage DISTRIBUTION
B AT T E R I E S
co-located at the site. Storage technologies are
mature and varied, including high-capacity
lithium-ion storage modeled off the early success
in the electric vehicle industry, as well as
pumped hydro facilities, a growing use of flow
batteries, and hydrogen fuel cells.

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T R A N S P O R TAT I O N E N E R G Y S U P P LY

As electric vehicle sales began to boom in the early 2020s, By 2035, distributed generation has grown substantially across
vehicle-to-grid integration began to be seen as a means to the US, with particularly high concentrations in states where
provide distributed and dispatchable storage capacity to the grid. government-backed incentive programs and mandates for large
scale or rooftop solar drove early market adoption.
Market uptake of electric vehicles across sectors Utility companies have recognized the
has continued the momentum of the early 2020s, opportunity to expand dispatchable energy
High levels of renewable generation have forced
positioning electric vehicles as the majority share storage through the electric fleet and created
utilities to identify new operating practices
of commercial fleet vehicles and over a third of smart car programs. Discharging energy into
that balance supply and demand. Distributed
private cars in the US2. Technology advances the grid during peak hours can be used to offset
systems are now linked to central control
in battery chemistry and EV manufacturing electricity costs incurred by individual customers
systems, providing utilities a new dispatchable
processes have substantially reduced costs, or take the form of PPAs for commercial scale
energy resource by way of virtual power plants.
and the abundance of charging infrastructure EV charging operators. Smart car programs for
In California, aggregated distributed energy
installed over the last decade has eased EV owners allow utility customers to receive
resources have served to flatten the “duck
trepidations around range concerns for private credits for providing energy to the grid using
curve” that challenged grid management; a grid
vehicle owners. Policy has played a major role in their home EV charging batteries. Additionally,
management phenomenon that occurred in the
the adoption of EVs as well, particularly through the advancement of sophisticated controls for
2020s due to the high output of solar PV in
government-backed programs to expand publicly grid services allows customers to use discharge
California reducing to zero at sunset at the same
available EV charging infrastructure and stations to receive credit to their account.
time that evening energy demand spiked.
economic incentives make EVs cost-competitive
with traditional internal combustion engine Use of fuel cell EVs for long haul trucking and Large scale utility batteries are now routinely
vehicles. drayage routes has continued to expand due to paired with utility-scale solar and wind arrays.
state and federal funding. This has allowed for Acting as virtual peaker plants, the batteries are
The U.S. has undergone a transformation of its
the creation of sustainable hydrogen business operated in a similar manner to older coal and
fleet, with advances in battery chemistry and
models and spurred the development of further natural gas peaker plants allowing utilities to
public policy signals leading to a ramp up in
green hydrogen technology advancements and quickly dispatch large quantities of energy to
electric mobility by 2035. Public transportation
cost reductions. balance the grid during sharp demand spikes.
needs and fuel economy standards coupled with
increased production and smarter design using Batteries are not the only form of storage
big data have driven down cost for the individual transforming the sector. Vast natural gas pipeline
consumer, resulting in a surge in the deployment networks serve as a substantial energy storage
of charging infrastructure. asset, with weeks’ worth of fuel available on
demand. The industrial sector continues to
2 - Global EV Outlook, US EIA tap into carbon capture and storage (CCS)
technologies to enhance productivity and
meet climate policy mandates. Hydrogen gas
produced at electrolysis centers linked to utility-
scale renewable energy generating centers begins
to provide new industrial storage applications.
As well as opportunities to decarbonize peaker
plants which are still largely powered by natural
gas.

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H E AT I N G & C O O L I N G RESIDENTIAL

A rise in hydrocarbon fuel bans at the municipal and state level Single family homes have seen a substantial rise in the number
combined with increased efficiencies for heat pumps led to a of dedicated battery systems and dispatchable vehicle-to-grid
broad electrification movement. Sparking an interest in new capacity. Residents and owners of multi-family buildings have
heating and cooling technologies coupled with more efficient also embraced the energy storage transition, incorporating
building envelope design. battery storage systems to optimize energy consumption and
enhance energy bill management.
Heating remains a major challenge to the overall
electrification goals of many regions in the US,
particularly in the Midwest and Northeast where
the transition to electric heating has nearly Residential energy-storage installations
doubled winter electricity demand. Thermal increased more than 200 percent annually from
energy storage is utilized in the industrial and 2014-20184. Many customers chose to install
large-scale commercial sectors to capitalize on solar with storage to allow for flexibility and to
the high heat processes, reducing wasted energy. take advantage of utility incentives. Government
District heating systems using low-temperature incentives for residential solar and storage allow
hot water sourced from air-source and ground- for a continued upward trend in the adoption
source heat pumps have also been incorporated rate, as prices decrease, and resources become
particularly on campuses and new development more accessible.
projects. Utilities were slow to integrate these distributed
Cooling demand across the country has grown resources into their services at first, but early
substantially, spawned by an increase in heat successes of virtual power plants (VPP) in
stress from climate change manifesting in a Vermont, California, Utah and abroad in
greater number of hot days, higher overnight Australia and Europe served to prove the
temperatures, and more frequent heat waves. business case for utility investment.
The impacts are particularly felt in dense urban Multi-family housing communities lag behind
environments. As a result, both peak cooling single family homes in providing energy
demand and baseline summer electricity demand storage. These communities operate as VPPs
have grown. While peak cooling demand when possible, modeled after early adopters
typically coincides with peak solar production in California and Utah. In communities where
helping to match the curves in places with high the resources to organize a VPP do not exist,
solar generation resources, distributed energy utilities rely on grid services and leverage EV
storage in the residential sector helps meet discharging to provide energy storage from this
nighttime cooling loads and flatten the demand typology.
curve in regions with less solar. As with heating, 4 - (McKinsey & Company)
thermal energy storage plays a major role in the
commercial and industrial sectors.
3 - (Weiss & Hagerty, 2019)

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COMMERCIAL AND INDUSTRIAL A D VA N C E D C O N T R O L A N D E F F I C I E N T M A R K E T PA R T I C I PAT I O N

Commercial and Industrial properties still rely on natural gas With significant energy storage and demand response
and hydrogen to provide high heat loads. Battery and thermal capabilities now located throughout the electrical grid,
energy storage are used based on the property needs for load markets have adapted to maximize control and dispatch
and site resilience. access, better leveraging potential benefits.
While the residential sector has primarily shifted Initial energy storage and demand response
to all-electric, the commercial and industrial markets were fractured, with many different
sectors still rely on gas for commercial space utility and ISO markets that such systems
and water heating as well as high heat industrial could participate in. Many of these programs
processes. Energy efficiency measures are taken were complex and often mutually exclusive.
to reduce the overall loads and thermal storage Along with the proliferation of energy storage,
in industrial facilities is used to improve the advanced communications and sophisticated
efficiency of heating operations. Commercial optimization algorithms emerged to enable
facilities use battery and thermal storage to energy storage systems to provide grid services
mitigate demand charges and improve resilience. at a level never before possible.
Commercial facilities such as airports install
microgrids allowing them to stay functional Wholesale and retail market revenue
during extreme events that may threaten power opportinuties are consolidated on common,
supply. open marketplaces to enable technologies to
quickly, and more accurately, react to market
needs. The democratization of market dispatch
has increased and standardized the access to
revenue streams for customer-side energy
storage and demand response. Payback periods
have reduced, resulting in widespread adoption
of such systems.

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E N E R G Y S U P P LY R E S I L I E N C E E N D O F L I F E B AT T E R I E S

The proliferation of distributed generation, electrical and With the rapid expansion of battery production and market
thermal energy storage, and fuel diversity has created an uses, various end-of-life (EOL) reuse and recycling
energy system which is much more resilient. programs began to appear, largely due to heightened
environmental awareness and regulatory requirements.
Spurred by rapid technological improvements generators. This adoption began with municipal
and declining prices, as well as key state and portfolios seeking an electricity resilience
federal grants to test new technologies, the solution for critical facilities that aligned to Early chemical battery designs (e.g lithium-ion,
energy systems of 2035 are more diverse than their decarbonization goals, and soon spread nickel-based and sodium-based batteries) made
ever. Energy generation technologies typically to other sectors. Residential customers as batteries difficult to recycle. Increased battery
used for large scale deployment (i.e. nuclear5, well have adopted solar-plus-storage systems. production capacity and the growing demand
solar PV and thermal, offshore and onshore Such systems now provide energy resilience for raw materials drove the industry to innovate
wind, hydro, etc.) can now be deployed at a to medical baseline customers who depend on around EOL management, adopting a circular
smaller scale. All new utility-scale renewables durable medical devices in their homes, as well economy approach to the industry. Design
are provided with some form of energy storage as for mitigating the effects of power loss, such enhancements included multiple second-life
while electrical and thermal energy storage as for public safety power shutoffs implemented applications, design for disassembly, clearly
are now common place in most new building in California in early 2020 for wildfire articulated material passports, and advanced
construction. prevention. environmental and waste mitigation. Continuous
improvement in battery technology also led
The diversity of energy sources, coupled with to a reduction in precious materials, a more
significant amounts of energy storage at all transparent supply chain as well as a more
levels of power and gas distribution systems, has environmentally friendly and socially conscious
resulted in a networked energy system which is manufacturing processes.
far more reliable and resilient than ever before.
Sophisticated controls coupled with real-time Early pioneers spotted the opportunity to use
asset monitoring have resulted in the ability EOL electric vehicle batteries to provide energy
to more reliably detect and adapt to failures storage for buildings. As the first wave of electric
quickly. Most buildings and neighborhoods have vehicles began to retire, these second life electric
some level of energy generation and/or storage vehicle batteries became a low-cost source of
which can be used to provide resilience during storage capacity across the U.S.
a utility failure. High-speed communication
systems provide status updates throughout the
energy systems to allow the distributed energy
assets, both utility and customer scale, to react to
changes and ensure operation of critical systems.
Solar PV paired with battery storage (solar-
plus-storage) has become standard as a
resilience system for individual buildings,
replacing older diesel or gas-fired emergency

5- The availability of nuclear energy generation at a reduced scale is

provided through advanced small modular reactors (SMRs). SMRs
vary in size from several megawatts to hundreds of megawatts. This
report assumes that the Nuclear Regulatory Committee has approved
SMRs and deployment of several systems has taken place between
2020 and 2035 (Advanced Small Modular Reactors, US DOE)

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RESOURCES

1. California ISO. (2017). Electricity 2030: Trends and Tasks for the Coming Years. Retrieved from http://www.caiso.com/Documents/
Electricity2030-TrendsandTasksfortheComingYears.pdf
2. International Energy Agency (IEA). (2019). Global EV Outlook 2019: Scaling up the Transition to Electric Mobility. International Energy Agency
(EIA). Retrieved from https://webstore.iea.org/download/direct/2807?fileName=Global_EV_Outlook_2019.pdf
3. McKinsey & Company. (n.d.). How Residential Energy Storage Could Help Support the Power Grid. Retrieved 2020, from https://www.
mckinsey.com/industries/electric-power-and-natural-gas/our-insights/how-residential-energy-storage-could-help-support-the-power-
gridOffice of Nuclear Energy. (2020). Office of Nuclear Energy FY 2019-21 Budget. Retrieved from U.S. Department of Energy:
https://www.energy.gov/ne/our-budget
4. U.S. Department of Energy (DOE). (2020). Advanced Small Modular Reactors (SMRs). US Department of Energy, Office of Nuclear Energy.
Retrieved 2020, from https://www.energy.gov/ne/nuclear-reactor-technologies/small-modular-nuclear-reactors
5. U.S. Energy Information Administration. (2019). U.S. Utility-Scale Battery Storage Power Capacity to Grow Substantially by 2023. Retrieved
from https://www.eia.gov/todayinenergy/detail.php?id=40072
6. Weiss, J., & Hagerty, J. (2019). Achieving 80% GHG Reduction in New England by 2050. Brattle. Retrieved from https://brattlefiles.blob.core.
windows.net/files/17233_achieving_80_percent_ghg_reduction_in_new_england_by_20150_september_2019.pdf

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Shaping a better world

C O N TA C T
e: energy@arup.com
w: www.arup.com/energy