Battery revenues in energy and balancing markets for different battery technologies using FASBATT™

Abstract The increasing integration of renewable generation in power grids and the transition away from fossil-fuel generation bring the need for widespread installation of stationary electricity storage to provide power systems with more flexibility. Pumped hydroelectric storage has been the predominant grid-level storage technology until now, but the flexibility, modularity, and cost of battery storage technologies make them the clear choice for the transition to power systems based on renewable generation. Battery energy storage systems (BESS) are projected to lead the growth of installed storage capacity in the short-term and long-term future, becoming the predominant storage technology before 2030. A literature review and BESS industry analysis reveals the position of lithium-ion batteries, specifically its lithium-iron-phosphate (LFP) chemistry, as the primary technology for stationary storage applications, aided by their dominance in portable electronics and electric vehicle markets. However, several issues with lithium-ion batteries show the benefits of diversifying the battery market, and the wide range of applications in stationary energy storage may contain opportunities for new technologies, such as vanadium redox flow batteries, sodium-ion batteries or iron-air batteries, to compete or coexist with LFP batteries. The market for these technologies is still small, and market opportunities are uncertain, but their sustainability and potential cost effectiveness make them attractive alternatives. The battery industry is recent and constantly evolving, with continuous advances and the emergence of new technologies. This contributes to the heterogeneity of the industry and the uncertainty and disparity in the modeling of some battery behaviors, which causes difficulties in dispatch planning and economic viability analysis of different business models. BESS simulations with different technology profiles reveal that improvements in BESS costs and performance are needed for standalone BESS projects to become feasible based on the price arbitrage in the day-ahead spot market. The secondary frequency regulation market offers more attractive opportunities for the moment.