The U.S. electric utility industry is in the process of revolutionary change, from impending restructuring an d competition, to limitations on installing new conventional generation and transmission and distribution equipment . The current situation in the electricity market may offer unique opportunities for energy storage technologies , particularly in combination with renewable energy generation, in which a few seconds to a few hours of electricity can be held for use at a later time [1,2]. These systems can be located near the generator, transmission line, distributio n substation, or the consumer, depending on the application they are addressing.

Storage can play a fexible, multi-function role in the electricity supply network to manage resources effectively. A s a generation resource, energy storage can provide savings in operating costs [3,4] or capital expenditures. Example s are: (a) spinning reserve for temporary generation backup, (b) frequency regulation for isolated utilities to maintain 60 Hz, and (c) capacity deferral of new generating facilities. In November 1994, the Puerto Rico Electric Power Authority installed a 20 MW/40-minute battery energy storage system for frequency and voltage regulation and spinning reserve [5]. The unit is dispatched just as any other generation resource in their system and the battery has reduced the impact of outages and improved reliability of electric service.

In combination with renewable resources, energy storage can increase the value of photovoltaic (PV) and wind -generated electricity, by making supply coincident with periods of peak consumer demand [6,7]. Energy storage ma y facilitate large-scale integration of intermittent renewable resources such as wind and solar onto the electric grid [8,9]. Energy storage systems complement renewable resources with siting flexibility and minimal environmental impacts .

Strategically-placed storage systems can increase the utilization of existing transmission and distribution (T&D ) equipment and defer or eliminate the need for costly T&D additions [10-14]. Energy storage can be used to reduc e the stress on individual transmission lines that are near peak rating by reducing substation peak load. Among specific T&D benefits are (a) transmission line stability for synchronous operation to prevent system collapse (b) voltag e regulation for consistent voltage within 5% of set point, and (c) deferral of construction or upgrade of T&D lines , transformers, capacitor banks, and substations. Opportunities may develop for Independent System Operators to deploy storage to help balance regional loads as restructuring proceeds [1].

Energy storage can serve customers as a controllable demand-side management option that can also provide premiu m services, including (a) power quality for sags or surges lasting less than 5 seconds, (b) uninterruptible power suppl y for outages lasting about 10 minutes, and (c) peak demand reduction to reduce electricity bills.

A power quality problem is any voltage, current, or frequency deviation that results in the failure or misoperation o f customer equipment. It can be a surge that lasts a few cycles (less than a second) or an outage that continues for hours, ongoing harmonic distortion or intermittent voltage flicker. A survey of 450 information systems executives at Fortune 1000 companies revealed that power quality problems resulted in significant computer crashes and productivity losses that are estimated to cost U.S. businesses $400 billion each year [15]. Power quality storage systems correct the problem in the first cycle and can be sized to provide a few seconds or minutes of protection.

Finally, energy storage is commonly used in stand-alone applications, where it can serve as an uninterruptible powe r supply (UPS) unit. UPS units are used for back-up power and only activate in cases of power outages unlike the energy storage systems discussed herein that perform a number of on-line applications. Isolated, remote locations, withou t connection to electricity grids, must consider some type of back-up power if an intermittent source is used. There ar e many examples o f battery energy storage integrated with PV and wind facilities at national parks and militar y installations [8,9,16-19].

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