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A techno-economic assessment of battery business models in the UK electricity market

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  • Martins, Jason
  • Miles, John

Abstract

The UK's transition to a zero-carbon economy is inevitably leading to an electricity grid with a high penetration of intermittent renewable energy generation, resulting in the need to install grid-scale energy storage systems at an accelerating rate. This study has taken the perspective of a business owner to assess the profitability of deploying battery technologies in the UK electricity market by analysing arbitrage in electricity markets, capacity market auctions, and ancillary services (frequency response and reserve). Additional work was conducted for integrating battery arbitrage cycling with solar and wind generation, comparing the utilisation of a linear programming model against a simplistic threshold cycling model. An overall economic assessment of value streams found that the lowest payback periods for premium ancillary services were 3.3 years (advanced lead-acid battery providing fast reserve) and 6.6 years (lithium-ion battery providing frequency response). Moreover, this research has demonstrated promising returns on investment for stacking short-term operating reserve with arbitrage in the balancing market. In the near future, battery systems will likely attain accelerated deployment due to reforms in ancillary service structures, cost reductions in battery technologies, greater price volatility in the balancing market, and effective policy incentives introduced by the UK government.

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  • Martins, Jason & Miles, John, 2021. "A techno-economic assessment of battery business models in the UK electricity market," Energy Policy, Elsevier, vol. 148(PB).
    • Handle: RePEc:eee:enepol:v:148:y:2021:i:pb:s0301421520306492
    DOI: 10.1016/j.enpol.2020.111938
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    5. Enrico Maria Carlini & Alfonso De Cesare & Corrado Gadaleta & Chiara Giordano & Michela Migliori & Giuseppe Forte, 2022. "Assessment of Renewable Acceptance by Electric Network Development Exploiting Operation Islands," Energies, MDPI, vol. 15(15), pages 1-19, July.
    6. Zhao, Chunyang & Andersen, Peter Bach & Træholt, Chresten & Hashemi, Seyedmostafa, 2023. "Grid-connected battery energy storage system: a review on application and integration," Renewable and Sustainable Energy Reviews, Elsevier, vol. 182(C).
    7. Côté, Elizabeth & Salm, Sarah, 2022. "Risk-adjusted preferences of utility companies and institutional investors for battery storage and green hydrogen investment," Energy Policy, Elsevier, vol. 163(C).
    8. Varela Soares, Ian & Mauger, Romain & Santos, Thauan, 2023. "Considerations for benefit stacking policies in the EU electricity storage market," Energy Policy, Elsevier, vol. 172(C).
    9. Michas, Serafeim & Flamos, Alexandros, 2023. "Are there preferable capacity combinations of renewables and storage? Exploratory quantifications along various technology deployment pathways," Energy Policy, Elsevier, vol. 174(C).

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