HOW TO IMPROVE THE EFFICIENCY OF ENERGY STORAGE SYSTEMS (ESS): FINDINGS OF THE MARKET OPERATOR STUDY

In response to changing market conditions in 2025, experts of JSC “Market Operator” updated their assessment of the efficiency of energy storage systems (ESS) in the electricity market. The key findings are presented in the analytical report “Energy Storage Systems: Operation in the Spot Market.”

The study focuses on ESS operation in the Day-Ahead Market (DAM), where the primary strategy remains price arbitrage—purchasing electricity during low-price periods and selling it during peak demand hours.

The analysis includes modeled price arbitrage results for an ESS with a power capacity of 1 MW and an energy capacity ranging from 1 to 4 MWh. The results show that increasing energy capacity to 3 MWh significantly raises the number of operating hours—from 410 to 1,195 hours per year. This directly increases annual revenue and improves the project’s financial performance.

At the same time, further increases in capacity do not produce a proportional effect. Once energy capacity exceeds 3 MWh, the rate of economic efficiency gains slows down, indicating that an optimal balance between costs and revenues has been reached.

According to the calculations, the payback period for an ESS with an energy capacity of 1 MWh is approximately 5 years. For systems with 3–4 MWh of capacity, this period decreases to 3.7–3.8 years. A similar trend is observed in key investment indicators—IRR, ROI, and NPV—which improve as capacity increases up to 3 MWh.

However, over the lifetime of an ESS, the average profit per hour gradually declines due to the natural degradation of batteries, which is an important factor for long-term planning.

A separate scenario examined the integration of ESS with solar power plants. In this model, energy is stored in the ESS during daytime hours using solar generation and sold during evening peak demand periods.

The modeling results for integrated ESS and solar operations show that, under current market conditions, this approach is less attractive compared to standalone arbitrage in terms of investment performance. This is due to limited revenue growth and additional capital expenditures that are not compensated by existing market price signals.

According to the findings of JSC “Market Operator,” the most economically efficient model for ESS utilization remains price arbitrage in the Day-Ahead Market, with an optimal power-to-energy ratio of 1:3. This configuration provides the best balance between capital investment and financial returns.

Note: On the company’s website, in the “Market Participants” section under the “ESS” subsection, you can find all materials developed by JSC “Market Operator” in the field of energy storage systems, as well as participate in testing the economic dispatch platform.