German batteries stabilizing solar energy prices at expense of own profitability

Analyst Thema Consulting Group has calculated the impact of rapid expansion of battery storage systems in Germany and found they will help stabilize solar prices by reducing the number of negatively-priced-electricity hours – but will cannibalize their own revenue in doing so.

From ESS News

Negative electricity price periods are becoming more frequent across Europe, driven during peak solar generation hours, and batteries offer the grid flexibility required to even out loads.

With batteries booming as project developers scramble to install them, Thema has investigated what this means for solar and battery business cases.

The analysts said battery “investment costs are still considerable” but pointed to falling costs and increased electricity price volatility. Thema estimates current battery costs at €75,000 ($88,000) to €120,000 per megawatt, per year for systems with two hours of storage capacity, depending on cost assumptions, service life, and weighted average cost of capital.

“Assuming one cycle per day and no losses, the average spread that must be achieved per day is €100 per megawatt-hour or higher,” wrote Thema, referring to a daily two-hour charging and two-hour discharging cycle. The report added, however, “In reality, the spread must be even higher to cover potential operating costs, degradation costs, or losses.”

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