Andrea Scrocca, Filippo Bovera, Giuliano Rancilio, Maurizio Delfanti
Energy storage solutions are becoming crucial for ensuring secure power system operations as conventional power generation is replaced by variable renewable energy sources. In particular, batteries are gaining attention due to falling costs and their role in energy time-shifting and ancillary services. Given their relevance in the energy transition, it is essential to assess whether electricity markets can ensure a proper economic sustainability for utility-scale batteries. This study investigates how different national market frameworks affect battery revenues and operations, focusing on Italy and Germany due to their distinct market designs, grid features, and electricity mixes. Two Mixed-Integer Linear Programming problems are developed to explore the value of optimized stacking of frequency services and energy time-shifting. Low Energy-to-Power Ratio batteries emerge as the most advantageous option in both countries, suggesting that the installed power, rather than the storage capacity, is a key factor to fully exploit market opportunities. Furthermore, the study reveals that the German market design prompts more effectively a diversification of battery utilization across services, while the Italian framework tends to prioritize specific ones. Consequently, the Italian electricity market currently fails in providing sufficient revenues to make profitable merchant investments in batteries, possibly calling for market design reform or public intervention. Conversely, explicit balancing capacity procurement procedures, such as the ones adopted in Germany, appropriately valorize power reserves availability. Overall, the findings suggest that further effort is needed to harmonize European electricity markets and improve the profitability of merchant energy storage investments.