Is energy storage a profitable business model?

Although academic analysis finds that business models for energy storage are largely unprofitable, annual deployment of storage capacity is globally on the rise (IEA, 2020). One reason may be generous subsidy support and non-financial drivers like a first-mover advantage (Wood Mackenzie, 2019).

How many green business models do batteries contribute?

Batteries contribute 6 green business models, of which 5 have flipped from red to green in comparison with Figure 2. These green business models include Trading arbitrage, Production forecast, as well as Frequency containment/restoration on a trading and T&D level.

How do business models of energy storage work?

Building upon both strands of work, we propose to characterize business models of energy storage as the combination of an application of storage with the revenue stream earned from the operation and the market role of the investor.

Are Li-ion batteries the future of energy storage?

Li-ion batteries are deployed in both the stationary and transportation markets. They are also the major source of power in consumer electronics. Most analysts expect Li-ion to capture the majority of energy storage growth in all markets over at least the next 10 years , , , , .

How can energy storage be profitable?

Where a profitable application of energy storage requires saving of costs or deferral of investments, direct mechanisms, such as subsidies and rebates, will be effective. For applications dependent on price arbitrage, the existence and access to variable market prices are essential.

Are batteries and hydrogen a good match for a business model?

The matching confirms the widespread preference of batteries and hydrogen in the sense that these technologies can serve almost all business models. Yet, the matching also highlights many green matches for other technologies, such as flywheels and thermal storage.