Renewable Energy Shifting and Ancillary Services Applications Are Expected to Grow at Respective Compound Annual Growth Rates of 17% and 14%

Renewables plus storage hybrid projects can provide an opportunity to bulk-shift energy to avoid power grid congestion and costly transmission network upgrades

Jul 28, 2022

A new report from Guidehouse Insights analyzes market participation models for energy storage systems (ESS), focusing on battery energy storage systems (BESSs). It explores estimated associated revenue streams across the lifetime of a BESS asset in wholesale market arbitrage opportunities and utility-scale ancillary services.

Battery energy storage systems can store energy to be used when most needed or most valuable. When installed in front-of-the-meter (FTM), BESSs can provide an array of long-term and short-term grid services which, depending on latent market and regulatory frameworks, can generate different and stackable revenue streams for related stakeholders, such as independent system operators (ISOs). According to a new report from Guidehouse Insights, BESS asset lifetime expected revenues in renewable energy shifting and ancillary services will likely reach $5,738 million and $1,488 million in 2022, respectively, and grow at respective CAGRs of 17.0% and 13.9% to reach approximately $23,586 million and $4,794 million by 2031.

“Global energy systems are transforming, with the global market for energy storage set to grow rapidly,” says Serkan Birgel, research analyst with Guidehouse Insights. “Utility-scale ESSs are beginning to consolidate around four high-value applications: frequency regulation, solar plus storage, peak capacity, and resource adequacy services.”

When paired with renewable power generation, renewables plus storage hybrid projects can provide an opportunity to bulk-shift energy to avoid power grid congestion, avoid costly transmission network upgrades, and provide grid capacity services and ancillary services such as frequency regulation, operating reserves, and Volt/VAR support. Profitability can further be enhanced through arbitrage opportunities. Inter-temporal wholesale power price differences can be arbitraged with fast-response ESS technologies to generate revenue, according to the report.

The report, Market Data: Evolving Market Participation Models for Energy Storage, leverages Guidehouse Insights syndicated Energy Storage research services, supplemented by interviews with market participants. Guidehouse Insights estimates that lifetime expected revenues for BESS assets will continue to grow. The Asia Pacific market is set to offer the largest opportunity by 2031, with the North American market closely following. An executive summary of the report is available for free download on the Guidehouse Insights website.


Cecile Fradkin

*The information contained in this press release concerning the report, Market Data: Evolving Market Participation Models for Energy Storage, is a summary and reflects the current expectations of Guidehouse Insights based on market data and trend analysis. Market predictions and expectations are inherently uncertain and actual results may differ materially from those contained in this press release or the report. Please refer to the full report for a complete understanding of the assumptions underlying the report’s conclusions and the methodologies used to create the report. Neither Guidehouse Insights nor Guidehouse undertakes any obligation to update any of the information contained in this press release or the report.