Economic benefits of PHS and Li-ion storage. Study cases: Austria and Bosnia and Herzegovina

Zejneba Topalović, Reinhard Haas and Marlene Sayer

Applied Energy, 2024, vol. 362, issue C, No S0306261924003714

Abstract: The operation of energy systems has changed significantly with the increase of intermittent renewable energy sources. New market players that produce, consume, and store electricity- prosumages, along with the different global factors, influence price spreads in the electricity market. This paper gives a comprehensive analysis of the economic viability of two of the currently most cost-effective electricity storage technologies: pumped hydro storage (PHS) and lithium-ion (Li-ion) when used for price arbitrage. The analysis is conducted using a price-taker approach for electricity market prices from 2011.-2019. in which the market has changed. The mixed-integer optimization model is applied with the subtraction of the total storage costs. Arbitrage opportunities for two different energy systems- one with a high generation of renewables and one with high shares of fossil generation are analyzed. Results indicate that pumped hydro storage with a total cost of 0.032 €/kWh is economically justified contrary to Li-ion batteries with a total cost of 0.217 €/kWh. The average yearly profit of PHS, for a study case with 83% of electricity generation from renewables, is 65% lower compared to the case highly dependent on fossil generation. Comparison between study cases indicates that profits of price arbitrage are dependent on full load hours, electricity price spreads, and flexibility options available, rather than on installed shares of renewables.

Keywords: Pumped-hydro; Li-ion; Profitability; Price arbitrage; Electricity market (search for similar items in EconPapers)
Date: 2024
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DOI: 10.1016/j.apenergy.2024.122988

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