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Grid batteries are being paid for the wrong service

Storage is billed as energy arbitrage. Most of its value is frequency response, and the market barely prices it.

Grid batteries are being paid for the wrong service
Grid batteries are being paid for the wrong service — XENVORA Photograph: Electrical Power Grid - Baltic states, HighVoltage 5576 / Wikimedia (CC0) · Licence

The public story about grid storage is time-shifting: charge when solar is abundant, discharge at the evening peak. That is real, and it is the smaller half of the value.

Milliseconds, not hours

A battery can respond to a frequency deviation faster than any thermal plant. That service keeps a grid stable, and in most markets it is compensated at a fraction of its worth.

The distortion has a consequence: projects are sized for arbitrage economics when a different configuration would deliver more grid benefit per unit of capital.

Two regulators have begun redesigning ancillary service markets. Everyone else is still paying for the wrong thing.

Karim Fadel
Energy & Climate Tech
Karim Fadel

Karim measures the energy bill behind modern computing, from datacentre cooling to grid-scale storage.

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