The Magazine of American Municipal Power, Inc. and its Member Communities


Battery Storage

5 min read



June 2023

By Zachary Hoffman, manager of communications and publications

Battery storage technology continues to evolve and the costs continue to fall. When coupled with U.S. Inflation Reduction Act grant opportunities, the outlook for battery storage is positive.

According to the U.S. Energy Information Administration (EIA), battery storage capacity has grown from 1 gigawatt (GW) in 2010 to 13.7 GW in 2015, and is expected to jump to 30 GW in 2025.

This increase in battery storage capacity can be explained by several factors, including declining costs and advancing technologies in battery density. As demonstrated through a number of use cases, utility-scale battery storage can provide benefits to utilities of all sizes:

  • Improved reliability and backup generation during major outage events;
  • Increased efficiency of intermittent resources like solar and wind; and
  • Increased system efficiency by supplementing generation supply when demand peaks.
Benefits to municipal electric systems

For municipal electric systems in PJM, one benefit of battery storage is its ability to assist in peak shaving efforts.

Danville Utilities and their partner, Delorean Power, installed a 10.5-megawatt (MW) energy storage installation comprised of more than 1,000 lithium-ion batteries with the goal of peak shaving to lower transmission costs.

Danville Utilities and their partner, Delorean Power, installed a 10.5-megawatt (MW) battery storage installation comprised of more than 1,000 lithium-ion batteries with the goal of peak shaving to lower transmission costs.

“The reason we completed a battery project was because of our transmission rates,” said Jason Grey, Danville director of utilities. “Last year, we saw our transmission rate increase by 19 percent, and this year, we saw an increase of 13 percent. Adding that to the double-digit increases in the years prior, it had become very serious for our ratepayers. These increases made it clear that we had to do more peak shaving on our system, and battery storage is a good way to do it.”

Electric transmission rates have been a major concern for AMP member communities in recent years, with rates across the PJM Interconnection (PJM) territory having increased dramatically in some cases. Rising rates are also affecting other transmission zones including MISO. Understandably, for many municipal electric utilities, these rate increases are impactful.

“Our most recent increase of 13 percent is an improvement over the previous year, but it is still too much,” Grey said. “That 13 percent is going to add about $3 million to our budget for fiscal year 2024. We had to do something.”

In March 2022, Danville Utilities and their partner, Delorean Power, began construction on a 10.5-megawatt (MW) battery storage installation comprised of more than 1,000 lithium-ion batteries. Delorean Power owns, operates and maintains the facility that is located on City of Danville property.

The project, which was completed and became operational in October 2022, is used by Danville Utilities for peak shaving and by Delorean Power for frequency response market operations. While Delorean uses the batteries the majority of the time, they are required to dispatch the units for transmission peak shaving when called upon by Danville Utilities.

The City of Bowling Green made a similar decision when they partnered with Ormat to install a 12-MW battery storage facility in the community.

The City of Bowling Green and their partner, Ormat, installed a 12-MW battery storage installation to utilize for peak shaving purposes for up to 120 hours per year.

Much like Danville, Bowling Green plans to utilize the facility for peak shaving purposes. Ormat will use the facility for frequency response market operations, and the City of Bowling Green may call upon the project for peak shaving activities up to 120 hours per year.

“Under our agreement, Ormat will charge the batteries overnight and have them ready for us to discharge at the times we direct,” said Brian O’Connell, Bowling Green director of public infrastructure/director of utilities and a member of the AMP Board of Trustees. “There is no limit on how many days we can select, just a limit of 120 hours per year, providing enough time to peak shave during all 1 coincidental peak (CP) and 5CP hours.”

The installations have the capability to produce a great deal of savings for the communities of Danville and Bowling Green. In fact, Bowling Green estimates that through peak shaving efforts, the project will recover the initial investment between years three and seven.

Many electric utilities still have concerns about the lifespan of batteries and their current discharge times. Lithium-ion batteries can last between 10-20 years and can be difficult to accurately discharge during peak hours. Battery storage deployments are likely to be hindered until more advanced battery technology becomes widely available.

However, as technology has continued to develop, the lifespan of lithium-ion batteries has greatly improved in recent years. These improvements have contributed to the rise in battery storage investments.

Both communities have performance guarantees included in their contracts, helping to balance the risk that might be associated with installing an battery storage facility for the purpose of peak shaving.

The City of Danville considered the lifespan of its battery storage facility while performing their initial study of the project. They determined that the technology had sufficiently advanced to meet their needs in an economically feasible way.

“The batteries do degrade about .5 to 1 percent faster each year than the typical generator does,” Grey said. “But where batteries do wear out a little bit faster, they are much more easily replaced and augmented than the typical generator. It makes good economic sense.”

Similarly, the City of Bowling Green considered the lifespan of their facility and worked in a replacement guarantee for the halfway point of their project.

“Ormat owns, operates and maintains the facility, and they will handle replacement of batteries,” O’Connell said. “On year nine, Ormat will replace the batteries to ensure that they maintain their capabilities. This, along with our performance guarantees, helps us ensure that the facility will address our needs for the full term of our agreement.”

Future growth in storage

The EIA predicts that the total battery storage capacity in the U.S. will reach 30 GW by 2025, and they are far from alone in their assessment. In October 2022, BloombergNEF projected that the world would reach 411 GW of storage installations by the end of 2030, with battery storage accounting for the majority of installations.

There are a number of reasons for this potential growth, with the two chief among them being costs and efficiency. According to S&P Global, battery costs have fallen by 60 percent over the past five years and are predicted to decline by an additional 60 percent by 2030. Additionally, as renewable generation installations continue to grow, they are increasingly paired with battery storage. This allows electricity produced by solar panels between the hours of 9 a.m. and 3 p.m. to be stored and dispatched during times of peak demand.

AMP continues to study the benefits and potential use cases for battery storage and will monitor the results of Danville and Bowling Green’s new storage projects. “Members who are interested in battery storage should involve AMP in the process as early as possible,” said Willey Sandell, vice president of generation operations and development. “There could be rules and regulations that exist as part of the interconnection agreements and studies required. Even if the battery storage is located behind the meter, we want to make sure everything is in place as far as the interconnection agreement is concerned.”

Additionally, AMP recently published the Focus Forward Behind-The-Retail-Meter Distributed Energy Resource Interconnection Technical Requirements Guidance document, which covers areas of major concern for public power utilities expecting a customer-owned installation. You can learn more about the specific details of this document in this Amplifier article. Access the guidance document on the Focus Forward page of the Member Extranet (login required).

If you have questions about battery storage and its potential applications, please contact Paul Beckhusen, senior vice president of power supply and energy marketing, at [email protected].