Every morning I wake up and take part in what I believe to be the greatest achievement in recent history. No, I’m not talking about my coffee maker, I’ll spare you my idolization of caffeine for another blog post. I’m talking about the electricity distribution system. As I turn on the various lights and appliances in my home each morning, I am increasing the amount of electricity that must be generated from a distant power plant, transmitted to a nearby distribution substation, and ultimately flows through into my coffee machine.

The electricity transmission and distribution system is constantly making sure that the supply of electricity matches the demand at every moment. This delicate balance is maintained by load forecasts that predict electricity demand minutes and days ahead, and market clearing houses that ensure the appropriate price is being offered for generators to supply the needed electricity. To supply this power at a moment’s notice, we need flexible power plants that can quickly ramp their electricity generation up or down to keep the system in balance. These generators are often the least efficient and most polluting generators on the grid, but we need them to maintain a balance on the grid. Right?

In recent years, one technology has upended the theory of electricity distribution. Touted as “The Missing Piece” by Tesla CEO Elon Musk, energy storage for the grid promises to eliminate the need to instantaneously match electricity generation with demand. If we could store the electricity during hours of excess generation (when the sun is shining and the wind is blowing) and then release it when we need it most (when we come home from work and plug in our electric vehicles), we could potentially do without the inefficient and polluting generators on the grid.

Grid energy storage is not a new technology. As early as 1930, the Connecticut Electric and Power Company implemented the first pumped-storage system in the United States. To store energy, water was pumped from the Housatonic River to a storage reservoir 230 feet above. When the energy was needed, water would flow through a hydroelectric turbine back down to the river and generate electricity. Other types of energy storage include compressed gas, thermal, and battery storage.

Of all the energy storage technologies, battery storage (specifically Lithium Ion battery storage) has gained the most popularity in recent years. Thanks to significant cost reductions, Li-Ion storage has become the most prolific storage technology in the United States and abroad. Companies like Tesla, Stem, Green Charge, Sunverge, Outback Power, and others offer Li-Ion battery storage projects that customers can install to manage their energy consumption. These storage systems can reduce customer bills by reducing peak demand, shifting energy to lower cost hours, and maximizing self-consumption of solar generation.

The State of California, a longtime leader in energy policy and regulation, is moving full steam ahead on battery technology. California’s Self-Generation Incentive Program (SGIP) has already provided financial incentives for more than 700 customer-sited battery energy storage projects. Beginning in 2017, the state’s three investor-owned utilities will collect $83 million on an annual basis through 2019 for the SGIP. Eighty-five percent of the $249 million in funding over the next three years is directed to fund energy storage projects.

But how are these battery systems performing? What types of benefits are they realizing for customers? And how are they changing the operations of the grid? These are all topics that Itron is exploring in significant depth for 2017. First, Itron staff will be discussing how utilities and system operators need to begin considering the increased proliferation of customer-sited storage technologies at the 15th Annual Energy Forecasting Conference. As the penetration levels of battery technologies increases, utilities must account for the battery algorithms when forecasting the load over a given period. Later in the year, Itron will build on its 2014-2015 SGIP Impact Evaluation Report and release the 2016 SGIP Energy Storage Impact Evaluation Report, which will quantify the impact of SGIP-funded battery storage projects on customer demand and carbon emissions. Finally, in August 2017, Itron will present at the International Energy Program Evaluation Conference on research methods related to storage analysis.

We’ve come a long way since 1882, when Thomas Edison built the first electricity distribution system in the United States. Edison’s electric grid resulted in numerous health and safety improvements related to the reduction of indoor smoke and open flames. In a way battery storage promises an equivalent quantum leap – but the viability of the technology remains unproven. The next couple of years will test whether the benefits of storage will live up to the hype.