ECONOMIC FEASIBILITY OF ENERGY STORAGE SYSTEMS AT PHOTOVOLTAIC POWER PLANTS CONSIDERING PRICE FLUCTUATIONS IN THE ELECTRICITY MARKET

Abstract

Fluctuations in wholesale electricity prices, in particular the increasing frequency of zero and negative prices in European countries, are changing the economics of renewable generation and increasing investment interest in energy storage systems (ESS) as part of photovoltaic power plants (PVPP). In this paper, the authors assessed the economic feasibility of implementing battery energy storage systems (BESS) in standalone and co-located configurations with PV stations, taking into account price volatility. A methodology for modeling the regime is proposed, for which a synthetic hourly market scenario for 1 year and a photovoltaic (PV) generation profile (power 100 MW direct current (DC), capacity factor CF ≈ 20 %) are created. The authors also adopted BESS dispatching rules (100 MW/400 MWh; efficiency RTE = 88 %) for arbitrage “charging at low/negative prices – discharging at high prices”. The cost parameters are consistent with the ranges in the annual report of the US National Renewable Energy Laboratory NREL ATB-2024 and the well-known annual analytical report Lazard Levelized Cost of Energy (LCOE+), published by the American investment bank Lazard to verify the realism of the assumptions. The simulated results show that the standalone BESS system receives a significant share of its revenue from volatility rather than average prices, while the hybrid PV + BESS system increases solar energy revenue by shifting output to hours of high prices. The authors’ sensitivity analysis with a volatility multiplier of 0.5–2x showed that under typical conditions for markets with frequent negative prices in 2024–2025, the net present value (NPV) and internal rate of return (IRR) for standalone BESS, and especially for hybrid systems, improve by tens of percent.