Electric energy storage can provide several important services and is used in a variety of applications. New and improved technologies and decreasing costs of batteries make energy storage competitive in certain applications. This paper presents services that can be provided by grid connected energy storage systems (ESSs) as well as applications in which these services can be deployed. A review of current and potential future markets has been conducted and metrics for measuring the monetary benefits of ESSs are presented. Deployment cases are defined for frequency regulation in the eastern United States and peak limiting in California and examined in cost-benefit and sensitivity analyses. The results show that energy storage is cost-efficient in these cases even if frequency regulation market prices and subsidies drop below today’s level. From the analyses conducted in this paper it can be concluded that energy storage offers valuable alternatives to current grid resources and can help integrate fluctuating generation and demand, if market structures that recognize the value of energy storage and the services it can provide are in place.