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Given the growing shares of renewable energy sources in the grids, the interest in energy storage systems has increased. The role of pumped hydro energy storage systems as flexible solutions for managing peak and off-peak prices from nuclear and fossil power plants in previous systems is now revitalized in the liberalized systems, with a volatile generation of wind and solar energy. Thus, understanding of the patterns behind the economics of energy storage is crucial for the further integration of energy storage in the grids. In this paper, the factors that impact the economic viability of energy storage in electricity markets are analyzed. The method of approach used in this study considers the electricity market price distribution, full load hours, the total costs of energy storage, and linear regression analysis. Using revenues from arbitraging a 10-megawatt (MW) pumped hydro storage system in the Western Balkans, resulting from the electricity market price distribution and the analysis of the total costs of storage, an econometric model is created. This model shows the impacting factors of energy storage development in the context of the rising renewables sector. Research shows that the previous hypothesis about the integration of energy storage systems in proportion to the increase in shares of renewables in the grids is incorrect. There is a significant correlation between energy storage revenues, the dependent variable, and the independent variables of hydro, wind, and solar generation. The conducted analysis indicates the future arbitraging opportunities of pumped hydro energy storage systems and provides useful insights for energy storage investors and policymakers. During the transitional period, until the deployment of renewables changes the effects of fossil power plants, energy storage price arbitrage is profitable and desirable for 500, 1000, and 2000 full load hours in the Western Balkan region. Despite the need for flexibility, with more renewables in the grids, large-scale energy storage systems will not be economically viable in the long run because of "revenue cannibalization". [ABSTRACT FROM AUTHOR]

With the expansion of renewables in the electricity markets, research on electricity storage economics is needed for a better understanding of the utilization of these systems and for improving the performance of intermittent variable generation. Collected up-to-date research of electricity storage systems published in a wide range of articles with high impact factors gives a comprehensive review of the current studies regarding all relevant parameters for storage utilization in the electricity markets. Valuable research of technical characteristics from the literature is broadened with the electricity storage analyses from an economic point-of-view. Analysis of selected technologies, considering different perspectives such as their profitability, technical maturity, and environmental aspect, is a valuable addition to the previous research on electricity storage systems. Comparing conducted analysis with the selected literature, electricity storage technologies are analyzed concerning their viability in the electricity markets. Given the current outlook of the electricity market, the main problems for storage's wider integration are still energy storage costs. These can be overcome with different applications of energy storage systems, integration of new market players, or a combination of storage technologies along with the implementation of new energy policies for storage. [ABSTRACT FROM AUTHOR]

The operation of energy systems has changed significantly with the increase of intermittent renewable energy sources. New market players that produce, consume, and store electricity- prosumages, along with the different global factors, influence price spreads in the electricity market. This paper gives a comprehensive analysis of the economic viability of two of the currently most cost-effective electricity storage technologies: pumped hydro storage (PHS) and lithium-ion (Li-ion) when used for price arbitrage. The analysis is conducted using a price-taker approach for electricity market prices from 2011.-2019. in which the market has changed. The mixed-integer optimization model is applied with the subtraction of the total storage costs. Arbitrage opportunities for two different energy systems- one with a high generation of renewables and one with high shares of fossil generation are analyzed. Results indicate that pumped hydro storage with a total cost of 0.032 €/kWh is economically justified contrary to Li-ion batteries with a total cost of 0.217 €/kWh. The average yearly profit of PHS, for a study case with 83% of electricity generation from renewables, is 65% lower compared to the case highly dependent on fossil generation. Comparison between study cases indicates that profits of price arbitrage are dependent on full load hours, electricity price spreads, and flexibility options available, rather than on installed shares of renewables. • Storage economic viability depends on the full load hours, electricity market prices and total costs of the technology. • Average yearly arbitraging profit of PHS in Austria is 65% lower compared to the Bosnia and Herzegovina case. • Total costs for 2000 full load hours are: Li-ion 0.217 €/kWh and PHS 0.032 €/kWh. • Energy arbitrage of Li-ion storage is unprofitable. • Increase of energy storage profits isn't proportional to higher shares of renewable generation. [ABSTRACT FROM AUTHOR]