Long-duration energy storage (LDES) and shorter-duration storage systems generate revenues through similar mechanisms—price arbitrage, capacity contracts, and ancillary services—but differ in value capture and market positioning.
Key comparisons:
- Price arbitrage:
- LDES benefits from multi-day/seasonal price differentials but faces declining marginal returns per added hour (e.g., 1-hour to 2-hour storage shows the largest revenue jump, while 11–12 hour gains are minimal).
- Shorter-duration (1–6 hours) captures high-value intraday peaks more efficiently but lacks seasonal flexibility.
- Capacity markets:
- LDES is increasingly prioritized for resource adequacy due to its ability to address multi-hour/seasonal grid imbalances.
- Shorter-duration systems often rely on ancillary services (e.g., frequency regulation), which face saturation risks as markets mature.
- Investment considerations:
- Revenue scalability: LDES revenues grow with duration but at a decreasing rate (e.g., median 6-hour systems generate ~2.5x more than 1-hour systems, but 12-hour systems see slower growth).
- Market scenarios: LDES shows the highest revenue potential in 100% decarbonization scenarios, while shorter-duration remains competitive in low-renewable-cost environments.
Forward-looking analysis suggests LDES achieves higher absolute revenues in deep decarbonization markets (e.g., $100–$400/kW in 2050 models), while shorter-duration systems retain dominance in markets with limited renewables penetration.
Original article by NenPower, If reposted, please credit the source: https://nenpower.com/blog/how-do-revenue-generation-opportunities-for-ldes-compare-to-shorter-duration-storage/
