Is energy storage a profitable business model?

Although academic analysis finds that business models for energy storage are largely unprofitable, annual deployment of storage capacity is globally on the rise (IEA, 2020). One reason may be generous subsidy support and non-financial drivers like a first-mover advantage (Wood Mackenzie, 2019).

How can energy storage be profitable?

Where a profitable application of energy storage requires saving of costs or deferral of investments, direct mechanisms, such as subsidies and rebates, will be effective. For applications dependent on price arbitrage, the existence and access to variable market prices are essential.

Does energy arbitrage affect lifetime profit?

Case study focussed on energy arbitrage on the intraday electricity market. Recent electricity price volatility caused substantial increase in lifetime profit. Lithium-ion cells are subject to degradation due to a multitude of cell-internal aging effects, which can significantly influence the economics of battery energy storage systems (BESS).

Why should you invest in energy storage?

Investment in energy storage can enable them to meet the contracted amount of electricity more accurately and avoid penalties charged for deviations. Revenue streams are decisive to distinguish business models when one application applies to the same market role multiple times.

Are lithium-ion batteries aging?

Following the cost reductions and technological advances of recent years, lithium-ion cells are now the predominant battery technology for BESS installations , . However, like other battery types as well, lithium-ion batteries are subject to degradation due to a multitude of cell internal aging mechanisms.

How much profit does Bess make from energy arbitrage?

With aging cost of 1000 EUR/kWh, the BESS obtains a cumulative profit of 256.1 kEUR or 213.4 EUR/kWh through energy arbitrage after only 852.8 FECs over the 12 years, while still having a remaining SOH of 86.7%.