Grid Battery Payback Time

Grid batteries, at current Irish wholesale prices, would pay for themselves in 2 years with a optimal strategy and 3 with a simple one. 

This latest auction for supplying batteries to the Chinese grid had a lowest bid at CNY 0.458/Wh ($63/kWh) That is 61 euro. Times a thousand for MWh of storage is 61,000 euro.

Irish wholesale electricity prices per hour are here.

If we take the price at the cheapest hour that day and say we fill the battery at that time. And add 20% to the cost to account for round trip losses. And then the price at the most expensive hour that day for the discharge the profit made is shown below.

A simple strategy of buy at 3am and sell at 5pm takes 3 years to pay off. So the practical optimum is somewhere in between.
The 20% round trip losses means it only occasionally makes sense in 2024 to top up at night, sell in the morning peak time. Top up at noon using solar and sell at 5pm peak again. But Solar has been increasing 38% year on year for decades so this strategy would work a lot better in future. Twice the usage would result in faster payback times.

A fair amount of Irelands wind energy is just lost. This could be bought very cheap near where it is made and later fed back into the system. Wind Energy Ireland said that over 3% was lost last year as due to wind farms being shut down because the electricity grid is not strong enough. Local buying and storage of that excess 3% would be very cheap as at the moment it is wasted. And this locally cheaper price is not reflected in all Ireland wholesale prices used in the calculation.

Business people do not miss opportunities to get the price of a 20 year long asset like grid batteries paid off in 2-3 years. So something must be stopping them adding these batteries at the moment. But knowing what could be achieved now without constraints is still an interesting exercise if we want to work out what constraints need to be reduced.

The code for this analysis is here and i can update it with more realistic assumptions as I learn them.