Can battery storage perform energy arbitrage?

For utilities, using battery storage to perform energy arbitrage is becoming a widely adopted practice. In this blog post, we’ll explain what energy arbitrage is, how it works in battery storage systems, and why it’s essential for today’s energy market.

Is energy arbitrage a profitable option for battery operators?

As the number of grid-scale batteries continues to grow, energy arbitrage has emerged as a profitable option for battery operators . In 2021, approximately 60% of utility-scale battery capacity in the United States was allocated for energy arbitrage purposes .

What percentage of battery storage is used for arbitrage?

In 2021, 59% of battery storage capacity was used for arbitrage, up from 17% in 2019. In California alone, 1,800 MW of new battery storage capacity began operation in 2021, and more than 80% of the state's total of 2,339 MW of battery storage was used for arbitrage.

How much does an energy arbitrage battery cost?

Note: in the initial Energy Arbitrage release, the lifetime cost of the battery is hardcoded at $0.15/kWh. This will be editable in future releases

What are energy arbitrage strategies?

Energy arbitrage strategies are increasingly important as renewable energy sources, such as solar and wind, add variability to the grid. By combining energy storage with arbitrage, utilities can help smooth out electricity supply. In the context of battery storage, this practice takes on unique applications.

How do battery storage systems use price arbitrage?

Battery storage systems can take advantage of this spread by charging in the low price hours and discharging in high price hours, a strategy called price arbitrage. However, the potential for arbitrage revenues varies across the U.S., with strong potential in renewables-heavy California and lower in the PJM Interconnection.