Potential revenue and breakeven of energy storage systems in PJM energy markets

  • Maurício B. C. SallesEmail author
  • Taina N. Gadotti
  • Michael J. Aziz
  • William W. Hogan
Environment Impacts of Renewable Energy Sources


The operation in energy arbitrage markets is an attractive possibility to energy storage systems developers and owners to justify an investment in this sector. The size and the point of connection to the grid can have significant impact on the net revenue in transmission and distribution systems. The decision to install an energy storage system cannot be based only on the cost of the equipment but also in its potential revenue, operation costs, and depreciation through its life cycle. This paper illustrates the potential revenue of a generic energy storage system with 70% round trip efficiency and 1–14 h energy/power ratio, considering a price-taking dispatch. The breakeven overnight installed cost is also calculated to provide the cost below which energy arbitrage would have been profitable for a flow battery. The analysis of the potential revenue was performed for 13 locations within the PJM Real-time market. We considered hourly data of day-ahead and real-time locational marginal prices over 7 years (2008–2014). Breakeven installed cost per MW ranged from $30 (1 MW, 14 MWh, 2009) to $340 (1 MW, 1 MWh, 2008).


Electricity markets Energy arbitrage Energy storage Flow battery Real-time market Breakeven 



This work was supported by São Paulo Research Foundation (FAPESP)—grants #2014/05261-0 and #2017/12257-7 and the US Department of Energy Advanced Research Projects Agency—Energy award no. DE-AR0000348.


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Copyright information

© Springer-Verlag GmbH Germany, part of Springer Nature 2018
corrected publication 2019

Authors and Affiliations

  1. 1.Laboratory of Advanced Electric Grids - LGrid, Polytechnic SchoolUniversity of São Paulo – USPSão PauloBrazil
  2. 2.John A. Paulson School of Engineering and Applied SciencesHarvard UniversityCambridgeUSA
  3. 3.John F. Kennedy School of GovernmentHarvard UniversityCambridgeUSA

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