energy arbitrage

Grid energy storage, also known as large-scale energy storage, is a set of technologies connected to the electrical power grid that store energy for later use. These systems help balance supply and demand by storing excess electricity from variable renewables such as solar and inflexible sources like nuclear power, releasing it when needed. They further provide essential grid services, such as helping to restart the grid after a power outage.
As of 2023, the largest form of grid storage is pumped-storage hydroelectricity, with utility-scale batteries and behind-the-meter batteries coming second and third. Lithium-ion batteries are well suited for short-duration storage (under 8 hours), due to their lower cost and sensitivity to degradation at high states of charge. Flow batteries and compressed air energy storage may provide storage for medium-duration. Two forms of storage are suited for long-duration storage: green hydrogen, produced via electrolysis and thermal energy storage.
Energy storage is one option to making grids more flexible. Another solution is the use of more dispatchable power plants that can change their output rapidly, for instance peaking power plants to fill in supply gaps. Demand response can shift load to other times and interconnections between regions can balance out fluctuations in renewables production.
The price of storage technologies typically goes down with experience. For instance, lithium-ion batteries have been getting some 20% cheaper for each doubling of worldwide capacity. Systems with under 40% variable renewables need only short-term storage. At 80%, medium-duration storage becomes essential and beyond 90%, long-duration storage does too. The economics of long-duration storage is challenging, and alternative flexibility options like demand response may be more economic.

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