Economics of electric energy storage. The case of Western Balkans

Abstract Paris Agreement has influenced a higher generation of renewable systems that impact energy balancing costs and question future energy supply stability. Energy storage could be the key component for efficient power systems transition from fossil fuels to renewable sources. The core objective of this paper is to investigate the cost-effectiveness of pumped hydro storage and large-scale battery storage systems. This paper provides prospects for pumped hydro storage installation in comparison to battery storage with an overview of installed capacities in the Western Balkan countries due to renewed interest in already installed pumped hydro plants. The method of approach is based on an economic assessment of the different types of storage depending on capital-recovery-factors for the capital costs, life cycle costs, full load hours, the price spread of electricity in the day-ahead markets, and Levelized costs of energy storage. Sensitivity analysis of the market prices is conducted. The major results of these investigations show the economic justification of pumped hydro storage systems implementation, their role in grid flexibility, and their influence on electricity market competitiveness. Levelized storage costs of 339 €/MWh for sodium-sulfur batteries show considerable potential for new installations, as compared to 125 €/MWh for pumped hydro storage.