Financial Economic Relief using Grid-Scale Battery Storage Systems in Future Electricity Markets

As volatility and uncertainty rises in the German electricity system, battery electricity storage systems (BESS) might offer relief for the increasing costs occurring from curtailment, reserve energy and imports. This paper explores the potential benefits of large-scale BESS on the economy by developing an optimization model to minimize these costs. Input data for this model is generated using an agent-based simulation model of the European electricity market, resulting in time series data of day-ahead market prices, loss of load values, imports, exports, power plant dispatch, dispatch of strategic reserve, and curtailment in hourly resolution. Ten different scenarios are analyzed, differing to capture uncertainties in the development of the market. The results show that large-scale BESS can reduce economic costs, although a decreasing marginal benefit can be seen with increasing storage size. Furthermore, the results indicate that a positive economic benefit largely depends on the storage configuration and assumed storage cost development, with the worst outcome being negative net savings and an unprofitable storage. This calls into question the extent to which large-scale BESS are suitable for economic relief.