Economic Value of Energy Storage Systems: The Influence of Ownership Structures

Abstract

Owners of renewable energy resources (RES) often choose to invest in energy storage for joint operation with RES to maximize profitability. Standalone entities also invest in energy storage systems and use them for arbitrage. In this paper we examine how these two forms of ownership affect the value of energy storage. Our study reveals that in a perfectly competitive market, energy storage holds equal value for both types of owners if they are risk-neutral. However, when agents are able to exert market power or exhibit risk aversion, the value of energy storage can differ between the two ownership structures. Additionally, we discuss how differential pricing and market barriers influence the value of energy storage. In the numerical studies, we explore how factors such as seasonal price volatility, RES types, and the siting of energy storage influence investment decisions.