What Is Grid-Scale Battery Storage?

Grid-scale battery energy storage systems are large installations, typically ranging from 10 megawatts to over 1,000 megawatts, that store electricity and discharge it when needed. Unlike the battery in your phone or car, grid-scale batteries are connected directly to the electrical transmission or distribution system and serve the grid as a whole.

The dominant technology for grid-scale storage is lithium-ion batteries. A single grid-scale installation might contain thousands of individual battery modules housed in shipping-container-sized enclosures, connected to power conversion systems that transform stored direct current into alternating current compatible with the grid.

How Battery Storage Systems Operate

A grid-scale battery storage system consists of several key components. The battery cells are organized into modules, assembled into racks, and housed in environmentally controlled enclosures. A battery management system monitors the state of charge, temperature, and health of every cell. Power conversion systems handle the conversion between DC and AC power. A control system manages when the battery charges and discharges based on grid conditions, market signals, or contractual obligations.

The operational profile depends on the intended use case. A system designed for peak shaving might charge during midday when solar generation is abundant and prices are low, then discharge during the evening peak. A system providing frequency regulation might cycle dozens of times per day, injecting or absorbing small amounts of power to maintain the grid’s 60-hertz frequency.

Duration: The Key Metric

Battery storage systems are defined by two key metrics: power capacity, measured in megawatts, and energy capacity, measured in megawatt-hours. The ratio gives the system’s duration. A 100 MW / 400 MWh system has a four-hour duration, meaning it can discharge at full power for four hours.

Most grid-scale batteries deployed today are configured for two to four hours of duration. As renewable penetration increases, the grid will need longer-duration storage to bridge multi-day periods of low wind or cloud cover. Technologies for long-duration storage, including iron-air batteries, compressed air, and gravity-based systems, are in various stages of development.

Economics of Grid-Scale Storage

The economics of battery storage have improved dramatically. Lithium-ion battery pack prices have fallen from over $1,100 per kilowatt-hour in 2010 to under $140 per kilowatt-hour in 2024. A complete four-hour grid-scale system costs roughly $250 to $350 per kilowatt-hour installed.

Battery storage generates revenue through multiple streams: energy arbitrage, capacity payments, ancillary services, and bundled PPA contracts. The stacking of multiple revenue streams is what makes projects financially viable.

Growth Trajectory and Grid Impact

Battery storage deployment is accelerating rapidly. The US installed roughly 18 gigawatt-hours of grid-scale battery storage in 2024, and the pipeline in interconnection queues exceeds 890 gigawatts. In California, batteries regularly provide several gigawatts of power during the evening peak, displacing natural gas peaker plants. Texas is seeing similar growth, with batteries providing rapid frequency response during extreme weather events.

As costs continue to decline and deployment scales up, batteries will become an increasingly important tool for managing the variability of renewable generation and maintaining grid reliability.