Japan has been particularly strong in the area of battery storage with over 200 utility-scale sodium–sulfur (NaS) battery units operational and linked to the electricity grid [7]. There are also examples of the application of superconducting magnetic energy storage systems to curb instantaneous voltage drops caused by industrial units—this being a very new and specialized application of storage technology.

Continuous investment in battery development has led to battery storage technologies achieving a commercially stable level in Japan. Battery development has been driven by very specific technical performance (measured as power and energy densities) and cost targets set by the Ministry of Economy, Trade and Industry (METI) supported by five focused research and development programs.

METI has targeted a fivefold increase in energy density with 2.5 times current power density and a 95% cost reduction by 2030 [8]. To achieve these targets a series of research programs has been supported by METI in recent years. These have focused on:

As well as supporting battery R&D the Japanese have also used subsidies to support stationary lithium-ion battery storage, effectively reducing the cost of batteries for residential consumers by a third. This program is designed to support residential feed-in tariffs for solar generation while demonstration projects by the New Energy and Industrial Technology Development Organization (NEDO) focus on grid-scale applications. Japan has also run large programs to demonstrate residential fuel cells in an effort to drive down prices. Although the investment in battery and fuel cell technologies is significant, far more support has been given to research in the nuclear sector.

The United States is arguably the most proactive country in terms of energy storage, and this is reflected in the intentions shown by US policy makers and the applications for new storage technologies. The US Department of Energy (DOE) had launched its Energy Storage Technology Program in 2009 primarily funded by the American Recovery and Reinvestment Act (ARRA) [9]. One primary objective was to improve the US electricity grid’s flexibility, economic competitiveness, and the network’s overall reliability and robustness. The DOE’s aim is for energy storage technologies to make the transition from being an area of research to an attractive commercial proposition as quickly as possible. This industry is estimated to be worth between $(2–4) billion over the coming 20 years [10].

In the period up to 2010, ARRA provided $185 million in support for demonstration projects, valued at a total of $772 million. These demonstration projects addressed a range of areas including the use of battery storage for balancing wind generation and frequency regulation, as well as compressed air storage and other storage technologies.

In addition to ARRA the DOE further supports energy storage development via the Advanced Research Projects Agency–Energy (ARPA-E) program. ARPA-E provides support in four main areas:

GRIDS alone provided over $55 million in project funding for fiscal year 2010–11 [9]. The inclusion of advanced thermal storage in the ARPA-E portfolio is interesting, and a number of demonstration projects using ice thermal storage, mostly in universities and schools [11], have been carried out.

In tandem with national government activities such as DOE’s Energy Storage Program, state governments have played a prominent role with their own activities. In California, several legislative mandates form the basis of which policies regarding energy storage are built upon. For example, the AB2514 statute requires publicly owned utilities to determine appropriate targets to procure energy storage systems by Dec. 31, 2016 [12]. This indirectly creates a regulatory focus for public utilities and sets the way to build an energy storage market in California.

Another driver behind the expanded deployment of energy storage in California is the Renewable Portfolio Standard (RPS). Under Senate Bill 107, California’s investor-owned utilities were required to procure 20% of their electricity from renewable resources by 2010. The target was later increased to 33% by Dec. 2020. To achieve this the new law requires that utilities establish appropriate procurement targets to meet the 33% goal and be retained in subsequent years. The implication for energy storage is that the bill also requires investor-owned utilities to integrate renewable energy resources to the grid in a manner that would require the least additional transmission facilities [12].

The policy framework in California is only one of many examples that are set out to accommodate more energy storage deployment. In Texas, for example, Senate Bill 943 classifies specific energy storage equipment or facilities as generation assets, which directly means that these facilities are eligible to be interconnected to the grid, obtain transmission service, and sell electricity to the wholesale market. Judging by SNL’s project map, California is arguably the leading state along with New York in terms of energy storage development.

Moves are also being made in the United States to make the market more supportive of storage by providing more recognition of its true value. The Federal Energy Regulatory Commission (FERC), the governmental agency that oversees the entire electricity market, realizing the importance of energy storage as a ramping source, has amended compensation practices for frequency regulation services and rewarded market operators based on their energy-ramping performances [9].

The first focus of German policy has been the expansion of pumped storage, with approximately 4.7 GW of new projects recently announced. To push forward the PHES vision the German Energy Act (EnWG) have offered exemptions to bulk storage facilities from grid access tariffs. This applies to any newly built storage or refurbished PHES scheme. EnWG has also brought moves to insure the eligibility of storage systems connection to the grid. The grid codes do not have any special requirements for storage systems to be connected to the grid, but the storage system must be able to meet the load as well as the generation requirement depending on its operation mode [14]. Evidently, large-scale, centralized energy storage is EnWG’s immediate focus. Germany is fortunate that some of its neighbors—not least Norway and Sweden—have immense PHES resources that can be accessed with increased interconnections [13].

Compressed air energy storage (CAES) and advanced adiabatic CAES (AA-CAES) are the second area of focus. Although only one plant (in Huntdorf) is currently operational, salt caverns are being scoured out. and caverns that are currently used to store natural gas may provide further opportunities. Meanwhile an AA-CAES plant that requires no fossil fuel consumption during the gas expansion phase is under development in Saxony-Anhalt. Commercializing power-to-gas is a further area of focus, providing the potential to compensate for long periods of low wind output and seasonal variations in output and demand [13].

The German Renewable Sources Act (EEG) has also introduced a premium payment for residential PV producers with the condition that excess solar energy generated is consumed locally without being injected into the distribution grid [15]. The German government has also provided support for domestic energy storage to encourage self-consumption of solar generation (systems less than 30 kW at peak times). This scheme is a collaboration between the Federal Ministry for the Environment, Nature Conservation and Nuclear Safety and the state-owned KfW bank and provides soft loans and cash incentives (c. 30%) for battery purchases. Germany is aiming to lead the domestic storage market with a capacity of 2 GW h [16].

The development of a low-carbon electricity system, as set out in the EU 2050 roadmap, requires member states to work together to develop technologies, drive the necessary investments, and harmonize the different rules across the European energy markets.

Decisions to invest in the development of storage and the deployment of adequate capacity will depend on the evolution of the whole energy system. They are closely linked to other developments such as electricity superhighways together with large-scale deployment of renewable generation in the North Sea and North Africa, the growth of electric vehicles, and improvements to demand-side management.

The most important focus for regulatory reform is to break down the barriers to storage, capturing its true value to the grid. The business model for storage is often dependent on its ability to act in response to fluctuating wholesale market prices; managing system frequency; providing reactive power control; and relieving local constraints. In many jurisdictions there is a need to separate supply chain functions. For example, system operation and distribution network management mean that a storage operator has to deal with multiple market actors with conflicting concerns to secure a revenue stream.

Within Europe, balancing products are only exchangeable cross-border among member states to a very limited extent. Improved market conditions and regulations agreed at the EU level could spur a massive effort in technology development. The EU has suitable instruments, for example, the RTD framework programme, Horizon 2020, and the strategic energy plan, which have the potential to drive forward the storage agenda.

Governments are rarely disposed to “picking winners” in terms of technologies or businesses. However, we consider that a successful strategic framework should clearly define the storage needs in terms of functionality (energy and power capacity, ramp rates, etc.). From this starting point the necessary support in terms of R&D funding and regulatory reform can be designed.