Energy Storage The expansion of variable renewable energy sources will require increased electric system flexibility. Energy storage can provide grid operators like PJM a way to keep power supplies stable when wind generators or other renewable power sources are not available. Energy storage comes in various forms: lithium-ion batteries, flywheels, thermal storage devices such as water heaters or space heaters, and electric vehicles. PJM has gained experience with storage technology on its campus. A two-megawatt array of lithium-ion batteries (owned and operated by a subsidiary of The AES Corp., a PJM member) was stationed at PJM for years and demonstrated how it could change its output or electricity consumption in less than one second to help PJM quickly balance short-term variations in electricity use. This battery project allowed PJM and the storage industry to better understand the operational and market nuances of this new technology. As a result of this initial work, AES has deployed more than 100 MW of merchant battery energy storage resources across the PJM footprint. Another energy storage pilot on PJM’s campus demonstrates how electric water heater thermal storage can participate in energy and regulation markets. A 105-gallon electric water heater provides hot water to a building and responds instantly to changes in grid needs when its controller receives pricing and regulation signals. Through these various pilot projects, PJM has used lessons learned to enhance market rules to support the participation of innovative technology. Also, the success of the energy storage pilot projects allowed PJM and its technology partners to inform the FERC and the industry of the value of fast-responding energy storage products and performance-based regulation.