How much revenue can be generated by participating in the frequency regulation market like PJM in US?

Cleantech Forum – Insightful Answers to Insightful QuestionsCategory: storageHow much revenue can be generated by participating in the frequency regulation market like PJM in US?
1 Answers
proton Staff answered 1 year ago

Say you operate a 1 MW storage plant. Assume round trip efficiency of 80% and availability/utilization of 90%. In 2014 the average price for frequency regulation ~$40/MWh. If you use these numbers the 1 MW plant would earn = 1 MW * 8760 hours * 80% * 90% * $40 = ~$252,000. 
If you built a 1 MW Lithium Ion storage plant now assuming overnight capital cost of $1000/kWh, you are talking about a $1 million per MW. You would recover this capital cost after 4 to 5 years by earning $252K per year. As more storage gets installed, the clearing price for frequency regulation would come down significantly. So the storage plant’s earnings over the 20 yr period becomes highly volatile.