Energy Storage and Back-up Power Generation

New Residential

What is Energy Storage and Back-up Power Generation?

In the last 20 years, an increase in the frequency and the intensity of extreme weather events, such as major hurricanes, thunderstorms, and ice storms in New Jersey and the associated costs of storm-related power outages, highlight the need for resilient energy systems that provide backup power in the event of a grid failure.[1]

Historically, generators fueled by fossil fuels, such as diesel or natural gas, provide backup power in the event of a power outage or natural disaster. In New Jersey, Hurricane Sandy exposed the vulnerability of generators, as the storm disrupted access to fuel and competing fuel demands from the transportation sector quickly depleted local fuel reserves.[2]

Energy storage refers to storing energy for later use when it is needed, such as during a power outage, or for energy arbitrage storing low priced energy and using that energy during peak demand when prices climb.[3] Energy storage technologies most applicable to the residential building sector include battery storage and fuel cells.

Backup power provides energy required for  supporting critical building functions by utilizing stored electrical or thermal energy (energy storage) from on-site power generation systems with islanding (generating power when the electrical grid is down) capabilities, or power from local microgrids and distributed energy generators.  Energy storage systems could also help provide grid stabilization functionalities such as Contingency Reserve and Frequency Regulation.

As the costs of energy storage and backup power generation systems continue to decline and the integration of these technologies continues to advance, several viable options exist for supplementing or replacing traditional standby generators, including:[4]

  • Islandable Photovoltaics (PV) systems with battery storage (see Solar Islanding and Microgrid Ready Solar PV)
  • Small Wind Energy Systems with battery storage (see On-Site Small Wind Energy Systems)
  • Fuel Cells and hydrogen storage
  • Vehicle-to-Grid (V2G) Technology and battery storage (see Alternative Transportation)[5]

How to Implement Energy Storage and Back-up Power Generation

First, analyze power demands and associated functions that would benefit from backup power in the event of power outage.

Distinguish between critical loads, such as providing basic heating and ventilation, cooking and food storage, emergency and night-time lighting, water pumps, and phone or laptop charging, and online access via a cable modem or wireless router versus non-critical loads such as full-capacity heating and ventilation, lighting, cooking, refrigeration, and television or other electronic entertainment and devices.[6] Figure 1 shows considerations for sizing solar and battery storage for backup power generation.

    Figure 1. Storage and Backup Power Considerations (Source: NREL)

    Figure 1. Storage and Backup Power Considerations (Source: NREL)

    Critical project-specific variables to consider include location, space, energy costs, available project incentives, local net metering and interconnection policies. Note that configuring power systems to operate independently of the grid requires investments in additional hardware and software components, including transfer switches, inverters, critical load panels, energy storage, and appropriate controls to allow successful islanding to take place.[7] Accounting for cost savings through the year (demand response) and for the cost of electric grid power outages (resiliency benefit) lowers the payback period for energy storage and backup power investments.[8]

    Contact the NJ Office of Clean Energy to learn about current programs, tools, and available funding.


    Hydrogen House Project, Hopewell, NJ.

    The Hydrogen House, designed by homeowner Mike Striki with a grant from the NJ Board of Public Utilities, features a 21-kilowatt PV system with battery storage used to run a low-pressure electrolyzer, which extracts hydrogen and oxygen from water. Low-pressure propane tanks store hydrogen, which can be burned for cooking and heating applications or used in a fuel cell to produce electricity, with only water and oxygen as by-products.


    On-site energy storage and backup power generation provides a resilient, local, and independent source of electric power during power emergencies while also helping to manage peak demand and lower utility costs throughout the year via demand response programs (see Demand Response and Peak Load Management, and Smart Metering). For example, energy storage systems provide a way for customers to shift power demands to off-peak hours and to take advantage of time-of-day pricing and lower energy prices.

    PV systems with solar islanding capabilities and battery storage combine the benefit of traditional PV systems, which avoid the use of fossil fuels, with the added benefit of increased power reliability. Battery storage helps to reduce common challenges with PV systems such as ramping, output variability, voltage and current inconsistencies that impact power quality, and a disconnect between the power supply (morning sun) and power demand (afternoon and evening air conditioning spikes).[9] Islandable PV systems with battery storage also provide value throughout the year, do not require refueling and can provide emergency power for extended periods of time given available solar resources and adequate battery storage.[10]

    Small wind energy systems with islanding capability and battery storage can operate independently from the grid during outages or at times of system peak. High wind speeds during severe storms may cause wind turbines to “cut-out” to protect the blades. Islandable wind turbines with added dynamic inverters and transfer switches can serve as a local, reliable, distributed energy resource that provides power to a storm affected home. Battery storage increases small wind power reliability by helping to balance the mismatch between the power supply (night) with power demand (daytime).

    Fuel cells offer a clean, energy-efficient, grid-independent and reliable source of power provided adequate fuel supply from a variety of domestic energy sources such as hydrogen, natural gas, and methanol making them a viable alternative for backup power generation and storage.[11] Excess electricity produced by fuel cells can run an electrolyzer and extract hydrogen from water, providing hydrogen for storage and for later use in the fuel cell to produce electricity when it is needed.

    Vehicle-to-grid applications with bi-directional electric-plug in charging stations enable fully charged EV’s to supply power to the grid during power emergencies or supply shortages.[12]


    Compared to traditional power generation systems, islandable systems with energy storage require additional hardware and software components, electrical design and permitting requirements, and safety considerations, which translate into higher costs.[13] As the cost of energy storage and backup power generation technologies decline, and power outages become more common, the cost savings from participation in demand response programs, and the resiliency benefits of avoided power outages, such as reduced business closures, health and safety hazards, food spoilage, and inconvenience from schedule disruptions, can offset the incremental costs. [14]


    Energy storage and backup power generation support energy resiliency in many ways. Backup power generation systems that utilize energy storage or islanding and microgrid ready capabilities can operate independently from the grid during outages or at times of system peak and increase grid reliability by managing system outages and peak demand. Separation from the electricity grid also offers protection from security threats. Energy storage and backup power generation allow customers to take full advantage of demand response programs that signal when to use, store, or sell energy back to the grid and encourage electric vehicle charging during off-peak, low-cost hours or charging back to the grid during periods of peak demand.  Likewise, energy storage and on-site backup power help to support the development of the broader smart grid by providing a local, distributed energy resource and helping to manage the integration of clean and renewable energy to the grid.

    [1] New Jersey Climate Adaptation Alliance, Understanding New Jersey’s Vulnerability to Climate Change.

    [2] E. Hotchkiss, I. Metzger, J. Salasovich, and P. Schwabe. 2013. Alternative Energy Generation Opportunities in Critical Infrastructure New Jersey. Produced under the direction of the U.S. Federal Emergency Management Agency by the National Renewable Energy Laboratory (NREL) (accessed Oct 3, 2018).

    [3] Energy Storage Association. 2018. Distribute Grid-Connected PV Integration (accessed Oct 18, 2018).

    [4] Ibid. Alternative Energy Generation Opportunities in Critical Infrastructure New Jersey.

    [5] NREL. 2018. Vehicle to Grid Integration. Energy Systems Integration Facility. (

    [6] Highland Park Solar Islanding Project (2015) Prepared for the Borough of Highland Park, NJ by Jennifer Senick, Executive Director, Rutgers Center for Green Building; Dunbar Birnie, Professor of Ceramic Engineering, Department of Materials Science and Engineering; Aman Trehan, Research Graduate Assistant; Nan Chen, Research Graduate Assistant; Deborah Plotnik, Program Coordinator, Rutgers Center for Green Building, Rutgers – The State University of New Jersey. At: (accessed Oct 1, 2018)

    [7] NJ Board of Public Utilities. 2017. Microgrid. (accessed Oct 1, 2018).

    [8] NREL. 2018. Valuing the Resilience Provided by Solar and Battery Energy Storage Systems (accessed Oct 18, 2018).

    [9] Energy Storage Association. 2018. Distribute Grid-Connected PV Integration (accessed Oct 18, 2018).

    [10] NREL. 2018. “Valuing the Resilience Provided by Solar and Battery Energy Storage Systems.” (accessed Oct 3, 2018).

    [11] U.S. Department of Energy Federal Energy Management Program (FEMP). 2016. Fuel Cells and Renewable Hydrogen. (accessed October 18, 2018).

    [12] Energy Storage Association (ESA). 2018. “Electricity Storage and Plug-In Vehicles.” (accessed August 21, 2018).

    [13] NREL. 2018. “Valuing the Resilience Provided by Solar and Battery Energy Storage Systems.” (accessed Oct 3, 2018).

    [14] DOE. “Smart Grid Investments Improve Grid Reliability, Resilience, and Storm Responses.” (accessed May 1, 2018).