Optimal Control of a Battery Storage On the Energy Market

TL;DR

This paper models battery storage operation in the German power market to evaluate profitability under different market conditions, revealing that current turbulent prices enable positive returns despite high costs.

Contribution

It introduces a market-specific model for battery storage profitability analysis considering distinct yearly price dynamics.

Findings

Profitability depends on market volatility and year-specific price patterns.

Calm market conditions do not support profitable battery operation.

Turbulent market conditions can yield positive payoffs for battery investments.

Abstract

Electricity storage is crucial for a successful transition towards carbon-neutral energy production. Despite considerable research and a number of promising future alternatives such as hydrogen, battery storages currently remain the first choice. However, costs remain high and it remains to be shown whether an investment can be profitable. This article addresses this question by modelling a battery storage operating in the German power market. We consider two periods with very distinct price dynamics, namely a calm year (2020) and a turbulent year (2023). It shows that even for low battery costs a 2020 style price environment does not allow for profitable battery operation, whereas current market conditions allow for positive payoffs.