Value of energy storage in the Nordic Power market - Benefits from price arbitrage and ancillary services

Electrical energy storage (EES) systems can offer different services in power systems, including flexibility for integration of variable renewable energy. The market value of energy storage in different power market designs should be quantified to justify business models and/or policy supports. This paper analyzes the economic potential of EES in the Nordic power market (Norway, Denmark, Sweden, and Finland) both in energy and ancillary services markets under current market conditions (2012-15). We propose a model for profit maximization of EES in different market levels, i.e., the day-ahead, intraday and regulation markets. The results introduce Finland as the most profitable area for price arbitrage in the day-ahead (Elspot) and regulation markets. According to the results, recent cross-border market couplings have diminished the price volatility in the intraday market (Elbas), yet the Danish bidding areas are the most lucrative places for flexibility solutions in this market. The actual benefits in the balancing market show higher uncertainties compared with inter-hour energy markets, but this market promises greater revenues. The aggregation of benefits from price arbitrage does not realize any storage profitable. The inclusion of ancillary services, however, suggests return on investment for low-cost, long lifetime batteries.