Economic Viability of Battery Storage Systems in Energy-Only Electricity Markets

One of the main drawbacks of solar and wind energy systems is the intermittent nature of production. Wind speed or solar insolation are not constant and cannot be called to produce on demand. In the transition to renewable energy, Battery Energy Storage Systems (BESS) have emerged as essential components in reshaping the way we generate, store, and consume electricity. These systems play a crucial role in addressing the mismatch of timing of electricity supply and electricity demand, providing a solution for storing surplus energy and ensuring a stable power supply. When energy generation is more than demand, the excess energy can be stored in batteries, and likewise, at times of excess demand, the stored energy can be fed into the grid. This paper is focused on the economic analysis of a standalone BESS. In this study, we evaluated an economic model in an energy-only, deregulated market. Since the greatest factor in determining plant profitability is power price, we used 12 years of reference price data from 2011–2022. Contrary to economic viability in many markets, we found that a BESS plant in an energy-only market in Texas, USA is unviable on a standalone basis. Insofar as a standalone plant is unviable, BESS operators must seek support from other factors such as colocation with solar power plants, ancillary revenue offered by market regulators and other economic incentives.