As countries worldwide aim to achieve their Nationally Determined Contributions (NDCs) under the United Nations Framework Convention on Climate Change Paris Agreement and update their NDCs in preparation for the 2021 United Nations Climate Change Conference, policymakers, regulators, and power sector planning agencies are increasingly faced with complex decisions about how to develop power systems that are reliable, affordable, and clean. Ambitious power sector transformation strategies, along with continually falling costs of renewable energy technologies, are driving higher levels of gridconnected variable renewable energy (VRE). 1 And because higher penetrations of VRE can drive an additional need for power system flexibility, decision makers are increasingly looking to emerging grid solutions such as energy storage to ensure reliable and cost-effective integration of VRE. 2Energy storage is one of several sources of power system flexibility that has gained the attention of power utilities, regulators, policymakers, and the media. Falling costs of storage technologies and improved performance and safety characteristics, particularly for lithium-ion battery energy storage, have made energy storage a compelling and increasingly cost-effective alternative to conventional flexibility options such as retrofitting thermal power plants or transmission network upgrades. In just the last decade, the cost of lithium-ion battery packs has dropped by 89% (BloombergNEF 2020). Cost declines for battery technologies have been driven by a combination of R&D efforts and increased manufacturing capacity for the electric vehicle sector, and this trend is projected to continue well into the next decade. Between 2018 and 2040, energy storage installations are projected to grow over 100 times (BloombergNEF 2019).The purpose of this report is to arm relevant decision makers with the initial layer of information they need to understand energy storage and to make informed policy, regulatory, and investment decisions around grid-connected energy storage. While many of the case studies presented in this report are based on experiences from the U.S. and Europe, the lessons learned can be applied to power sectors in emerging economies. Importantly, this report covers topics related grid-connected energy storage for power sector applications. The term "grid-connected" implies that the storage system is interconnected to a centralized power system. Topics related to off-grid, micro-grid and mini-grid energy storage applications are not covered in this report, nor are procurement practices for energy storage. Energy storage is poised to become a major component of power systems of the future.Energy storage has been instrumental for the development of affordable and reliable electricity supply since nearly the inception of modern power systems. More recently, technology advancements and rapidly falling costs for newer technologies, particularly battery energy storage systems, have ignited interest among utilities, policymakers, and end-use e...

This report is available at no cost from the National Renewable Energy Laboratory (NREL) at www.nrel.gov/publications. U.S. Department of Energy (DOE) reports produced after 1991 and a growing number of pre-1991 documents are available free via www.OSTI.gov.Cover photo from iStock 471670114.NREL prints on paper that contains recycled content.

Customer-sited, off-grid battery storage systems, which are not connected to the grid, are not covered in this fact sheet. Additionally, while electric vehicles can act as BTM storage systems and provide services to the customer and power system, this fact sheet does not cover them.

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The USAID-NREL Partnership addresses critical challenges to scaling up advanced energy systems through global tools and technical assistance, including the Renewable Energy Data Explorer, Greening the Grid, the International Jobs and Economic Development Impacts tool, and the Resilient Energy Platform. More information can be found at: www.nrel.gov/usaid-partnership.