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Support schemes for utility-scale energy storage: a comparative analysis

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  • Wolf, André

Abstract

To incentivize investment in large-scale energy storage, policymakers must develop instruments that mitigate the substantial market-related revenue risks faced by storage operators. This paper uses real-life German electricity wholesale price data to evaluate the impact of two innovative, price-dependent support instruments — a percentage markup on the discharging price and a minimum discharging price — on investment returns. To demonstrate the impact of technology-specific cost structures, the paper compares a lithium-ion battery system with a compressed air energy storage system. The paper shows that these instruments effectively improve investment returns and are more cost-efficient than traditional capacity remuneration schemes at expanding storage capacity. Furthermore, they do not compromise the system-friendliness of storage activity. Rather, they enhance storage availability during periods of market volatility.

Suggested Citation

  • Wolf, André, 2026. "Support schemes for utility-scale energy storage: a comparative analysis," Applied Energy, Elsevier, vol. 411(C).
    • Handle: RePEc:eee:appene:v:411:y:2026:i:c:s0306261926002576
    DOI: 10.1016/j.apenergy.2026.127605
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    JEL classification:

    • Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy
    • Q41 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Demand and Supply; Prices
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming

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