Utility-Owned Storage
- Control and Strategic Deployment: Utility-owned storage allows utilities to deploy storage exactly where it is needed, providing better control over grid management. This can lead to more efficient use of resources for tasks like congestion management and renewable integration.
- Cost Savings: Utilities can potentially capture more value from utility-owned storage by deferring transmission investments and leveraging economic incentives not available to merchant owners. For instance, a utility-owned battery can focus on system needs rather than purely market-driven revenue streams, which may lead to higher long-term savings.
- Risk and Responsibility: While utilities have full control over the assets, they also bear the risks and responsibilities associated with maintaining complex energy storage systems.
Merchant-Owned Storage
- Revenue Streams: Merchant-owned storage relies on earning revenue from various market streams, such as wholesale energy markets and ancillary services. Multiple revenue streams are crucial for the profitability of merchant-owned systems.
- Flexibility and Competition: Merchant-owned storage promotes competition in the energy market, which can drive down costs. However, these systems might not be able to defer transmission upgrades as effectively as utility-owned systems.
- Reduced Upfront Costs: Merchant-owned systems typically require less upfront capital from utilities, as they operate on their own financial models and revenues.
In terms of cost savings, utility-owned storage can potentially provide more long-term benefits by optimizing grid operations and deferring infrastructure investments. However, it involves higher upfront costs and operational risks for utilities. Merchant-owned storage, while requiring less initial capital, may face challenges in maximizing cost savings unless it can diversify revenue streams effectively.
Original article by NenPower, If reposted, please credit the source: https://nenpower.com/blog/how-does-utility-owned-storage-compare-to-merchant-owned-storage-in-terms-of-cost-savings/
