Energy-oriented battery systems are used to provide services such as electricity peak load shaving

Capital costs for large-scale battery storage systems installed across the United States differ depending on technical characteristics. Systems are generally designed to provide either greater power capacity (a battery’s maximum instantaneous power output) or greater energy capacity (the total amount of electricity that can be stored or discharged by a battery system), according to the U.S. Energy Information Administration.

The cost of a battery system can be expressed in terms of power capacity costs (dollars spent per unit of maximum instantaneous power output as expressed in dollars per kilowatt) or energy capacity costs (dollars spent per unit of total energy stored as expressed in dollars per kilowatthour), depending on which attribute is prioritized.

Power-oriented systems are shorter duration systems, meaning they are typically designed to generate large amounts of instantaneous power output but cannot sustain that output for very long. These systems have lower costs per kilowatt and higher costs per kilowatthour.

For example, a $12 million battery system with a nameplate power capacity of 10 megawatts and nameplate energy capacity of 4 megawatthours would have relatively low power costs ($1,200 per kilowatt) and relatively high energy costs ($3,000 per kilowatthour).

Power-oriented systems are designed to provide grid reliability services such as frequency regulation, which requires large shifts in the power capacity in quick, sub-hourly intervals.

Power-oriented battery systems are more prevalent in the PJM Interconnection than other regions and actively participate in PJM’s ancillary services market.

Energy-oriented systems are designed for use for longer durations, meaning they have more energy capacity relative to their power capacity. As a result, these systems have higher average costs per kilowatt and lower costs per kilowatthour.

For example, an $8 million battery system with a nameplate power capacity of 4 megawatts and nameplate energy capacity of 10 megawatthours would have relatively high power costs ($2,000 per kilowatt) and relatively low energy costs ($800 per kilowatthour).

Energy-oriented battery systems are used to provide services such as peak load shaving, which is the act of delivering power during periods of the highest electricity demand, typically over the course of one or more hours. Energy-oriented battery systems are relatively more popular in the California Independent System Operator (CAISO) area.

The nameplate duration of the battery storage system is the ratio of nameplate energy capacity to nameplate power capacity. For example, a system with a 6-megawatt power capacity and a 24-megawatthour energy capacity has a nameplate duration of 4 hours.

  • Short-duration batteries—which are power oriented—have durations of less than 30 minutes.
  • Medium-duration battery storage systems have nameplate durations ranging between 30 minutes and 2 hours.
  • Long-duration battery storage systems—which are energy oriented—have more than 2 hours of nameplate duration.