Motley Fool readers have seen Argonne National Laboratory battery researcher Jeff Chamberlain dive into upcoming innovations for smartphones and electric cars. These markets may use the same basic lithium-ion battery chemistry today, but their unique requirements demand very different next-generation designs.

But that's not all. Chamberlain made it clear that another major battery market is primed to explode very soon -- and most people know nothing about it.

"There is something that's more difficult to describe to the consumer, and that is the electricity grid," Chamberlain said.

How do batteries fit in the grid?

As it turns out, today's power grid won't work very well in the dawning era of renewable energy. Solar cells and wind towers generate power on a very different schedule than coal-fired power plants or nuclear reactors. These differences require massive battery banks to bridge the gap between human demand and Mother Nature's uncontrollable supply.

"Our electricity grid was built a certain way, and that way is to have on-demand production," Chamberlain explained. "So as I flip my light switch on at home, there's some little knob somewhere that turns the power up. There is no buffer. It's a very interesting production cycle compared to other consumer goods. It was built a certain way, and the grid is currently changing in two different ways.

"One is, first our demand is increasing. But another is, around the world human beings are trying to get off fossil fuels and that means using solar and wind. Well, we cannot turn up the sun or wind, or turn down the sun or wind according to our energy needs. So the more those technologies penetrate the grid, the more you need energy storage. You need a buffer.

"And that is a very difficult challenge that's similar to transportation because it's cost-driven," Chamberlain said. "But it's also different from transportation because we're not limited by volume or mass like we are in vehicles. We're working on energy storage systems that are stationary."

To understand the unique properties of battery packs scaled up to power plant levels, Argonne and other research facilities are working closely with giants of industry. Together, they have set some aggressive goals:

Grid-scale batteries should cost no more than $100 per kilowatt hour, down from over $500 per kWh today,

they should have a usable life of at least 20 years, and

safety should be comparable to today's natural gas turbines.

On top of these ambitious targets, Argonne and its partners hope to deliver five times more efficient batteries for one-fifth of current costs, all in just five years.

Industrial partners

Solar power expert Applied Materials (NASDAQ:AMAT) is one important partner, filling in the blanks in Argonne's solar energy storage needs. Improving the temporary energy storage situation, in which generated power hangs around until the larger power grid demands an infusion, is a double-header bet for Applied Materials.

For one, the company would like to benefit as Argonne licenses out new grid-scale innovations across the power generation industry.

More directly, Applied Materials should see rising demand for its solar solutions as the energy storage situation improves. Solar power and massive batteries are joined at the hip, aligning the goals across two industries.

Elsewhere, Argonne keeps a working relationship with power utilities such as Southern California Edison (NYSE:EIX), helping the researchers focus on the right problems. These batteries need to be cheap and efficient, with very long effective lifespans. So far, so good: if that was all, these batteries might feel right at home in an electric vehicle as well.

But grid batteries must handle much larger power loads and amperage levels, which places different demands on the chemistry involved and drives up costs. On the other hand, the low weight and compact space demands in a vehicle that will lug around its own batteries every day simply don't exist in the grid power scenario. These batteries can be much larger and heavier without causing problems for the operator. That takes some pressure off the development and construction costs.

That's not all. Industrial giant United Technologies (NYSE:RTX) needs to pair its geothermal power systems with interim storage, much like the solar and wind power guys. So United is an active part of Argonne's battery research projects, and has won awards for its own work on so-called flow batteries. In this model, much of the work done by electrodes in, say, a lithium-ion battery is shifted to the electrolyte liquid instead. That's a highly scalable system that can also provide a short-term power surge as needed. With some more work put into lowering costs and increasing capacities, flow batteries might just be the perfect solution for power grid installations.

And don't forget about General Electric (NYSE:GE).

Working separately from Argonne and the Energy Hub, GE pursues its own energy storage ideas. "They have built an energy storage device based on molten sulfur which is quite effective," Chamberlain told me, taking care not to overstate GE's involvement in the broader battery research effort. But General Electric is not a total lone wolf. "There are a couple of people from GE who are in our advisory committee for the Hub, and we're currently trying to rope them into our commercial entity arm. But they do advise us."

Big batteries for small power grids

Apart from exploring renewable energy sources with a whole new supply and demand balance, modern power grids are also getting smaller.

"Microgrids are emerging," Chamberlain said. "The military wants to get off the grid because they view that as a susceptibility for being attacked by enemy combatants."

There are other reasons that not everyone can or wants to connect to the main power grid. In some places it's just not cost-effective. In others, it's more about making sure your community can function under its own power. Whether these mini grids are powered by newfangled solar and wind solutions, or by small coal and natural gas plants, their independence requires an effective storage solution.

"Certainly in the U.S.," Chamberlain said, "but even more certainly in places like India, China, and Africa, there are small grids emerging with wattage independence, and usually that will require a storage element."

That's about the size of it

So power grids, large and small, are becoming increasingly dependent on huge battery installations. And a lot of people don't realize how big this need -- and opportunity -- really is. Chamberlain is struggling to spread the word.

It might feel less tangible, but when a hurricane like Sandy blows through New Jersey and knocks power out for days at a time, wouldn't it be nice if there were an inexpensive alternative that everyone had in their basement or every neighborhood had in a box somewhere, where they could have a small amount of power to keep the refrigerators running, for example? Or to keep essential tools operating? There's this growing need for a stationary source that is a slightly different physics and chemistry problem than transportation-related storage.

Worldwide sales of the power grid batteries are expected to stop at just $164 million this year, according to clean technology market researcher Navigant Research. In 10 years, grid-scale batteries should explode into a $2.5 billion annual market. Keep in mind that these batteries will also be many times cheaper and more powerful than the best energy storage solutions we have today, and it should be clear that the power grid is changing in a big way.