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Credit: Hannah Peters

Electricity Generation

Energy Storage (Distributed)

A Tesla Powerwall unit

There is an energy transition under way. The world is shifting away from carbon-based fuels to renewable energy. With distributed renewables, such as rooftop solar, a utility’s customers become producers and can sell power to the grid. Another part of the transition is distributed energy storage—the ability to retain small or large amounts of energy produced where you live or work and use it to meet your own needs.

The wind and sun have their own timetables, making generation variable. Storage can ensure electricity is available, even when sunshine or breezes are not. There are two basic sources of small-scale storage: stand-alone batteries and electric vehicles. If they are used to enable more reliance on renewables, there will be substantial climate benefits.

Creating a distributed energy storage system, or grid independence, requires affordable storage, and until now, prices for batteries have been prohibitively expensive. That is changing. From $1,200 per kilowatt-hour in 2009, the cost dropped to roughly $200 in 2016. Companies are predicting $50 per kilowatt-hour in a few years. For $1,200 per kilowatt-hour, you can purchase a 24-kilowatt-hour energy storage system and get a car thrown in for free—the all-electric Nissan LEAF.


batteries…cost has dropped: Nykvist, Björn, and Måns Nilsson. “Rapidly Falling Costs of Battery Packs for Electric Vehicles.” Nature Climate Change 5, no. 4 (2015): 329-332; Knupfer, Stefan M., Russell Hensley, Patrick Hertzke, Patrick Schaufuss, Nicholas Laverty, Nicolaas Kramer. Electrifying Insights: How Automakers Can Drive Electrified Vehicle Sales and Profitability. McKinsey & Company, 2017.

2012…McKinsey & Company predict[ion]: Hensley, Russell, John Newman, and Matt Rogers. “Battery Technology Charges Ahead.” McKinsey Quarterly, July 2012.

General Motors and Tesla…in 2016: Voelcker, John. “Electric-Car Battery Costs: Tesla $190 per kwh for Pack, GM $145 for cells.” Green Car Reports. April 28, 2016.

[savings from] peak-demand utility billing: Dyson, Mark, James Mandel, et al. The Economics of Demand Flexibility: How “Flexiwatts” Create Quantifiable Value for Customers and the Grid. Boulder: Rocky Mountain Institute, 2015. 

Battery cost could halve: Nykvist and Nilsson, “Falling Costs.”

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Technical Summary

Energy Storage (Distributed)

Project Drawdown defines distributed energy storage as: decentralized energy storage systems, generally based on battery storage, that allow buildings and vehicle owners to act as active participants in the electricity distribution system rather than passive consumers. This solution does not replace a conventional practice, but is key to the development of variable renewable energy sources.  

Distributed energy storage systems allow consumers to draw power from the grid at times and rates of their choosing, avoiding steep charges for consumption at peak times or when demand spikes. When combined with distributed electricity generation sources such as rooftop photovoltaics, distributed energy storage can open a path to energy independence for buildings. It can also ease adoption of variable, renewable energy sources on the utility scale by effecting a more predictable and responsive demand pattern. Finally, distributed energy storage is a crucial part of modernizing the energy system at large, through providing smart grid and related services.

Presently, distributed energy storage is practiced only on a very small scale. The systems are generally based on battery storage, which has been prohibitively expensive for many years. Moreover, policy-based incentives for the use of distributed energy storage, such as time-of-use electricity pricing plans, have been lacking in many areas. The status quo has recently begun to shift, however, as batteries decrease sharply in price and utilities seek ways to avoid costly infrastructure upgrades in the face of rising demand. The increased penetration of distributed generation resources has also provided added incentive for consumers to consider the use of  distributed energy storage. As such, distributed energy storage is at a tipping point and is poised to become a major element of the energy system.


Energy storage on the distributed scale is a powerful tool for enabling transformations in the energy system by supporting the integration of variable renewable generation sources in the electricity grid. Because the potential emission reduction impact from distributed energy storage comes principally from the enabling of these technologies, to avoid double counting, it is assumed that the impact is already accounted for in the distributed electricity generation solutions such as wind and solar, as well as in the electric vehicles solution.

As such, an independent model was not developed for this enabling solution.


Distributed energy storage is likely to become a major practice in the coming years and financially beneficial to consumers in the long term. It will have an important role to play in increasing the independence of energy consumers, and in helping to balance the load and supply “behind the meter” (i.e. in a building) with the capacity available on the grid. Distributed energy storage is also a key resource for ensuring the reliability of electrical energy services. As a result of these many benefits, it can be expected that adoption of distributed energy storage will increase greatly in the coming years, making it an important part of the changing energy landscape.

However, due to inefficiencies in energy storage and high carbon dioxide emissions associated with the manufacturing of batteries, the use of distributed energy storage might not imply a reduction in emissions when considered in isolation. When vehicle-to-grid storage is considered alongside the increased integration of renewable energy sources for electricity generation, the impacts may prove more favorable. The emissions avoided from diesel and gasoline more than balance the emissions resulting from the manufacturing of batteries. As such, electric vehicles used as distributed energy storage can provide a significant climate benefit. Developing infrastructure and policy frameworks to promote adoption of vehicle-to-grid storage is therefore crucial as electric vehicle penetration increases.

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