Rapid growth of intermittent renewable power generation makes the identification of investment opportunities in energy storage and the establishment of their profitability indispensable. Here we first present a conceptual framework to characterize business models of energy storage and systematically differentiate investment opportunities. We then u. As the reliance on renewable energy sources rises, intermittency and limited dispatchability of wind and solar power generation evolve as crucial challenges in the transition toward sustainable energy systems (Olauson et al., 2016; Davis et al., 2018; Ferrara et al., 2019). Since electricity storage is widely recognized as a potential buffer to these challenges (Fares and Webber, 2017; Kittner et al., 2017; Davies et al., 2019), the number of advancements in energy storage technology and the amount of deployed capacity have rapidly grown in recent years (Schmidt et al., 2017; Comello et al., 2018; Sutherland, 2019; Blanc et al., 2020). The profitability of investment opportunities for storage overall, however, has remained ambiguous, partially due to an incomplete identification of such opportunities in modern power systems (Argyrou et al., 2018; Albertus et al., 2020) and contradicting conclusions about the profitability of individual opportunities (Braff et al., 2016; Kaschub et al., 2016; Fares and Webber, 2017; Metz and Saraiva, 2018; Comello and Reichelstein, 2019).Numerous recent studies in the energy literature have explored the applicability and economic viability of storage technologies. Many have studied the profitability of specific investment opportunities, such as the use of lithium-ion batteries for residential consumers to increase the utilization of electricity generated by their rooftop solar panels (Hoppmann et al., 2014; Stephan et al. Business ModelsWe propose to characterize a “business model” for storage by three parameters: the application of a storage facility, the market role of a potential investor, and the revenue stream obtained from its operation (Massa et al., 2017). An application represents the activity that an energy storage facility would perform to address a particular need for storing electricity over time in modern power systems. A market role of potential investors refers to their assumed position in the electricity value chain. The revenue stream describes the type of income a storage facility can generate from its operation.Table 1 provides a list and description of eight distinct applications derived from previous reviews on potential applications for energy storage (Castillo and Gayme, 2014; Kousksou et al., 2014; Palizban and Kauhaniemi, 2016). In the first three applications (i.e., provide frequency containment, short-/long-term frequency restoration, and voltage control), a storage facility would provide either power supply or power demand for certain periods of time to support the stable operation of the power grid. The following two applications in Table 1 (i.e., provide black start energy and backup energy) would support the availability of electricity at all times through the provision of power supply during blackouts either to reboot grid operations or to bridge the power outage for an. Although electricity storage technologies could provide useful flexibility to modern power systems with substantial shares of power generation from intermittent renewables, investment opportunities and their profitability have remained ambiguous. Here we first present a conceptual framework to characterize business models of energy storage and, thereby, systematically differentiate investment opportunities. Our framework identifies 28 distinct business models based on the integrated assessment of an application for storage with the market role of the potential investor and the achievable revenue stream from the storage operation. We then use our framework to match storage technologies with the identified business models and to review findings of previous studies on the profitability of individual matches. Our review shows that a set of commercially available technologies is sufficient to perform all identified business models. We also find that matches appear to have approached a tipping point toward profitability. Yet, this conclusion only holds for matches that either have been examined since 2017 or entail multiple business models. Overall, many feasible matches have been ignored, indicating research gaps that need to be filled for a detailed and conclusive understanding of the profitability of energy storage.Widespread profitability of storage will also require continued work on increme. All methods can be found in the accompanying Transparent Methods supplemental file.
