L R AS Published on Monday 11 December 2023 - n° 469 - Categories:European countries
Network management in Europe is hampered in some countries by a price differential that is too narrow
Battery energy storage is playing an increasingly important role in the world's energy systems, ensuring the reliability and flexibility of the grid by managing the intermittency of renewable energies. However, the low profitability of these systems in Europe is likely to put the brakes on their deployment,
while their extension is essential to mitigate network flexibilities. In Bulgaria, Italy and Hungary, the profit potential is highest for energy arbitrage. In Bulgaria, the revenue potential is the highest: the battery storage system with two hours of discharge capacity offers energy arbitrage capable of generating $110 per megawatt-hour (MWh) in average spot market revenues in 2023.
On the other hand, the small gap between the lowest and highest prices (in Sweden, Norway and Finland) means that profits cannot be made.
Currently, profitability is limited to markets operating under very specific conditions, so policies and incentives are needed to mitigate risk and encourage construction. If spot market profits exceed system costs, even a 30% tax credit on battery projects may not be enough to make energy arbitrage a viable stand-alone business case in 2023.
https://www.rystadenergy.com/news/europe-battery-storage-profitability-ppas
Rystad Energy of 6 December 2023
