Key Factors Affecting the Viability of Battery Energy Storage System Projects
Key Factors Affecting the Viability of Battery Energy Storage System Projects
| Factor | Impact on Project Viability |
| Cost of storage | Battery costs, while falling, are still the most significant driver of project viability. Costs depend on the MW/MWh ratio of the battery.
The terminal value at the end of the project’s economic life also has a bearing, with a higher terminal value improving project economics. |
| Network reinforcement cost | Higher conventional network reinforcement costs increase the value of deploying storage as an alternative, improving project economics (and vice versa) for DNOs directly and for third-party projects with a contract for peak shaving with a DNO. |
| Commercial services | Increased access to and higher value from the provision of commercial services (for example, ancillary service markets, the wholesale market, the capacity market) increase project revenue streams, improving project economics (and vice versa).
It is generally accepted that value streams will need to be stacked to increase the economic viability of BESS projects (see Figure 10). |
| Policy developments | Removing barriers to storage or creating a more favorable environment for investment enhances the realizable value of a project, improving project economics (and vice versa). |
Source: ADB Handbook for battery energy storage systems