Utility-Scale Batteries In The U.S. Shift Toward Price Arbitrage As Primary Use – EIA

Utility-scale batteries in the United States are increasingly being used for price arbitrage, a trend highlighted in the annual survey of power plant activity. Arbitrage refers to buying electricity when prices are low and selling it when prices are high, and it has now become the most common application for large-scale battery systems.

In earlier years, operators reported that their batteries served multiple purposes, such as frequency regulation, excess wind and solar generation, system peak shaving, and load management. However, starting with the 2023 survey, operators were asked to specify the primary use of their systems. The results showed a clear shift. Last year, 66% of all utility-scale battery capacity had arbitrage among its uses, and 41% of total capacity was primarily dedicated to it.

Frequency regulation, once the most common use, was the second most reported primary function in the latest survey. About 24% of the total capacity was primarily used for frequency regulation, which helps maintain the grid’s steady frequency of 60 cycles per second. This change indicates how the role of batteries is evolving along with electricity market dynamics.

Much of the country’s utility-scale battery capacity is concentrated in California and Texas. By the end of 2024, the California Independent System Operator (CAISO) reported 11.7 gigawatts (GW) of installed battery capacity, with 43% primarily used for arbitrage. In Texas, the Electric Reliability Council of Texas (ERCOT) reported 8.1 GW of battery capacity, with half dedicated mainly to arbitrage.

The growing share of batteries used for arbitrage reflects the increasing value of storing electricity to manage price fluctuations and improve grid economics. While frequency regulation and other services remain important, arbitrage has clearly emerged as the dominant use case for utility-scale batteries in the U.S.