Analysis of low-price profits in manufacturing of power storage equipment

Do investors underestimate the value of energy storage?

While energy storage is already being deployed to support grids across major power markets, new McKinsey analysis suggests investors often underestimate the value of energy storage in their business cases.

What are energy storage technologies?

Energy storage technologies, store energy either as electricity or heat/cold, so it can be used at a later time. With the growth in electric vehicle sales, battery storage costs have fallen rapidly due to economies of scale and technology improvements.

How do I evaluate potential revenue streams from energy storage assets?

Evaluating potential revenue streams from flexible assets, such as energy storage systems, is not simple. Investors need to consider the various value pools available to a storage asset, including wholesale, grid services, and capacity markets, as well as the inherent volatility of the prices of each (see sidebar, “Glossary”).

Which energy storage technology has the most power in the world?

PHES was the dominant storage technology in 2017, accounting for 97.45% of the world’s cumulative installed energy storage power in terms of the total power rating (176.5 GW for PHES) . The deployment of other storage technologies increased to 15,300 MWh in 2017 .

How is a wholesale electricity market profit maximized?

The profit is maximized by coordinating charge and discharge bids that influence the locational marginal price. Scenarios generated from historical data are utilized to model the uncertainty of supply and demand bids submitted to the wholesale electricity market.

Is the energy project economically feasible?

The conducted financial analysis showed that the project is economically feasible under the adopted favorable assumptions. Three scenarios were modeled. Under the most optimistic one, the IRR reached 14.27%, and the investment return time was 10 years. When using more long-term data concerning energy prices, it was 7.46% and 23 years, respectively.