Techno-economic profitability of grid-scale battery storage allocation in European wholesale markets under a novel operation optimization strategy

Abstract

This study evaluates the techno-economic benefits of grid-scale battery storage allocation across 25 European countries, each with distinct wholesale price variation patterns. The evaluation is based on a novel optimization-based operation strategy, which adapts to the volatile nature of electricity markets. By making smart decisions on key operational factors, the strategy optimizes battery scheduling in the day-ahead market, maximizing profits while minimizing degradation and extending battery lifespan. Additionally, a behavior-aware battery management strategy is developed to accurately simulate real-world performance and degradation. The study identifies the most attractive European markets for grid-scale battery storage by evaluating multiple key economic metrics, including annual profit per unit of energy installed, battery lifetime, total revenue, net present value, return on investment, and payback period. The findings show that, under the proposed strategy, battery storage integration generates significant positive profits in 23 European countries. Romania, Latvia, Lithuania, and Estonia emerge as top performers, offering high profitability, short payback periods, and long-term financial sustainability. In contrast, Spain, Portugal, and Norway are currently unprofitable, though sensitivity analysis suggests that a 75 % reduction in battery costs could make these markets viable for investment.