Impact of Regulatory Changes
Market Access and Participation
- FERC Order 841: This order requires regional transmission operators and independent system operators to provide non-discriminatory access to electric storage providers. While it aims to facilitate market participation, its implementation has been slow, and the impact on profitability is still evolving.
Market Rules and Revenue Streams
- Revenue Potential: Regulatory changes can affect how battery storage systems participate in markets, potentially increasing or decreasing revenue streams based on how rules are structured. However, the revenue potential is often undervalued, and investors need to reevaluate their approaches.
- Market Revenue Fluctuations: Changes in market pricing and demand can significantly impact profitability. For example, net market revenue for batteries decreased from $103/kW-yr in 2022 to $78/kW-yr in 2023 due to lower energy prices and loads.
Environmental and Siting Regulations
- Environmental Permits: New regulations may require environmental permits for battery energy storage systems (BESS), which could increase operational costs and impact siting decisions. Such changes can affect project viability.
State-Level Incentives and Policies
- Subsidies and Incentives: State-level policies can offer subsidies or create new market opportunities for storage. For instance, Texas laws have introduced new ancillary service products that could benefit battery operations, though specific funding for storage is limited.
Supply Chain and Interconnection Challenges
- Regulatory Delays: Long interconnection queues and uneven enforcement of rules can delay project completion, increasing costs and reducing profitability.
Future Regulatory Impacts
- Upcoming Regulations: Future changes, such as those affecting lithium-ion batteries, may impose additional operational costs or restrictions that could influence profitability.
In summary, regulatory changes can both hinder and enhance the profitability of battery storage projects by affecting market access, operational costs, and revenue streams.
Original article by NenPower, If reposted, please credit the source: https://nenpower.com/blog/how-do-regulatory-changes-impact-the-profitability-of-battery-storage-projects/
