Investment Returns of Solar + Storage Systems: Key Factors and
Driven by falling costs, policy incentives, and rising electricity prices, solar+storage projects now offer compelling returns for residential, commercial, and utility-scale investors.
Where a profitable application of energy storage requires saving of costs or deferral of investments, direct mechanisms, such as subsidies and rebates, will be effective. For applications dependent on price arbitrage, the existence and access to variable market prices are essential.
While energy storage is already being deployed to support grids across major power markets, new McKinsey analysis suggests investors often underestimate the value of energy storage in their business cases.
The return of investment is an important metric about how attractive an investment may be. However this is an important note that energy storage usually does not generate electricity savings directly, but allows the transport or trading of electricity. This usually results in storage not having a high ROI like solar investments, for example.
Building upon both strands of work, we propose to characterize business models of energy storage as the combination of an application of storage with the revenue stream earned from the operation and the market role of the investor.
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