An analysis of the competitiveness of hydrogen storage and Li-ion batteries based on price arbitrage in the day-ahead market

Abstract

Acceleration of the hydrogen economy is being observed on a global scale. It is considered to be a potential solution to the problems with high-carbon energy, industry, and transport systems. The potential of production, cost-competitiveness, and opportunities are currently being investigated to provide insights to policymakers, researchers, and industry. In this context, this study makes a quantitative assessment of the competitiveness of hydrogen storage compared to Li-ion batteries based on price arbitrage in the day-ahead market. Two scenarios that form the boundaries of rational decision-making regarding the charging and discharging of energy storage are considered. The first one assumes the charging and discharging of energy storage facilities over the same hours throughout the entire year. The selection of these hours is based on historical electricity prices. The second scenario assumes charge and discharge during historical daily minimum and maximum prices. The results show that NPV is below zero for both technologies when current values of investment expenditure are assumed. The outcomes of sensitivity analysis indicate that only a substantial reduction of investment expenditure could improve the financial results of the Li-ion batteries (NPV>0). The investigation also shows that even simplified charge and discharge over the same hours allows one to achieve 47% (hydrogen) and 70% (Li-ion batteries) of the maximum operating profit when the perfect foresight of prices is applied. In each case, NPV for Li-ion technology is significantly higher than for hydrogen; for example, for a 1 MWh and 1 MWout storage system, NPV is EUR -4.85 million in the case of hydrogen and with Li-ion NPV is EUR -0.23 million. Consequently, the application of expensive decision support systems in small systems may be unprofitable. The increase in profits may not cover the cost of developing and introducing such a system.