Grid balance and energy storage: how does it work?

Electricity has a special characteristic: in an electricity system, generation and consumption must remain in balance at all times. This makes electricity fundamentally different from many other products. A surplus cannot simply be put into stock, and a shortage cannot be replenished from a warehouse.

Energy storage changes this. A battery, for example, can absorb electrical energy at one moment and feed it back at a later moment.

But this raises a new question. It is important not only whether a battery can store energy, but above all when it should charge, when it should discharge and how much capacity should remain available for that purpose.

This is precisely where grid physics, electricity markets and energy modelling come together.

The electricity grid is a large interconnected system of generators, high-voltage interconnections, transformers, distribution grids and millions of individual users.

Demand changes every moment. Households switch appliances on and off. Industrial facilities change production. Electric vehicles begin charging. Heat pumps switch on. Data centres and other large users draw power.

At the same time, production changes. Conventional power plants can ramp up or down, but wind and solar farms largely produce according to the available wind and solar irradiation.

The system must continuously absorb all these changes.

In the interconnected electricity system of continental Europe, this takes place around a nominal grid frequency of 50 hertz. That frequency is an important indicator of the balance between generation and consumption. If generation is too low relative to demand, frequency tends to fall; if there is a production surplus, it tends to rise. ENTSO-E therefore describes frequency as the ‘heartbeat’ of the electricity system.

With alternating current, the direction of voltage and current changes periodically. A frequency of 50 Hz means that this electrical cycle takes place fifty times per second.

For an individual user, that frequency seems self-evident: an appliance is connected and electricity comes out of the socket. Behind that apparent simplicity, however, is a continuous control process.

Grid operators and market parties make sure that generation and consumption correspond sufficiently. When unexpected differences arise, reserves and other flexible resources must be deployed to bring the system back towards its intended state.

Europe has several forms of balancing capacity and European platforms on which balancing energy can be exchanged. ACER describes electricity balancing as the set of mechanisms by which transmission system operators absorb differences between supply and demand.

The challenge is therefore not to predict exactly what every individual user will do. It is to keep the overall system sufficiently balanced at all times.

Energy balance and grid congestion are two different problems.

At national or European level, it may be perfectly possible to generate as much electricity as is consumed, while insufficient transport capacity is still available at a specific location.

Electricity must physically travel through lines, cables, transformers and substations, all of which have limits. A wind farm may generate electricity while sufficient demand exists elsewhere. If the grid between those locations lacks enough transport capacity, a bottleneck still arises.

This has become an important issue in the Netherlands. The IEA identifies grid congestion as a major barrier to new generation, storage and electricity demand, and stresses that flexibility is needed alongside grid expansion.

Where a battery is located and when it charges or discharges therefore matters. A battery can be valuable for the balance of the overall electricity system, but depending on its location and dispatch it can either reduce or increase local congestion.

Wind and solar energy have relatively low marginal generation costs and play an ever-greater role in the electricity system. Their production, however, depends on weather. A solar farm produces mainly during the day; a wind farm produces when the wind blows. Electricity demand follows a different pattern.

This means periods of high renewable generation do not necessarily coincide with periods of peak electricity demand. This is where storage has an important role.

When plenty of electricity is available, a battery can charge. At that moment, it behaves as a consumer from the electricity system's perspective. Later the same battery can discharge. It then feeds electricity back and behaves as a producer from the grid's perspective.

Storage can therefore shift energy through time. A battery does not generate new energy; some of the stored energy is even lost during a full charge-discharge cycle. Its value lies in making electrical energy available at a different time.

The IEA describes battery storage as one of the versatile sources of short-term flexibility: batteries can shift renewable generation to other periods, respond rapidly for system balancing and deliver various forms of grid support.

Two concepts are easily confused in battery storage: power and energy capacity.

Power, expressed for example in MW, indicates how quickly a battery can charge or discharge. Energy capacity, expressed in MWh, indicates how much energy is available.

Consider a 20 MW / 40 MWh battery. It can provide a maximum of 20 MW. When fully charged and discharging continuously at 20 MW, it theoretically has energy available for about two hours.

A 20 MW / 80 MWh battery can provide the same maximum power but theoretically for about four hours. This ratio is often expressed as a battery's duration.

The distinction is essential when determining storage value. An application that needs a very short, rapid response may require relatively high power; bridging several hours instead requires sufficient energy capacity. The optimal configuration therefore depends on what the battery is intended to do.