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Given the ridiculous volatility of energy prices in many places of the world recently (notably Europe), I do wonder why this isn't seen more as a proper investm

Given the ridiculous volatility of energy prices in many places of the world recently (notably Europe), I do wonder why this isn't seen more as a proper investment opportunity? If you can buy cheap and sell for 4x the price the next day[1], that ought to cover the infrastructure costs very rapidly right? [1] e.g. https://www.nordpoolgroup.com/en/Market-data1/Dayahead/Area-Prices/de-lu/daily/?view=table https://www.nordpoolgroup.com/en/Market-data1/Dayahead/Area-...

bjornsing 4y ago
I’ve looked into this. Even sent an email to Amber Kinetics (the flywheel company in the OP) some months back asking for some basic economic parameters, but didn’t get a reply. My conclusion was that simple electricity arbitrage using refurbished lithium ion batteries would be reasonably profitable right now but that business case depends on volatility staying high. The CAPEX is approximately 500 EUR per kWh storage capacity, and you can maybe make 0.25 EUR per kWh and day doing arbitrage. It’s hard to know what the electricity market will look like in the relevant timeframe.
- deleted 4y ago
  [deleted]
- ben_w 4y ago
  5.5 years payback time? Yeah, I don’t expect current volatility in European markets last that long. It might, but I don’t expect it.
  - bjornsing 4y ago
    Yea, that’s the issue. You also need some more time to pay interest and make a profit.
concordDance 4y ago
You can do the maths for this yourself to find out :) Big utility battery installations are around $400/KWh IIRC and can cope with at least 2000 cycles[1]. Looking at the table you provided it looks like you'd be able to do around €50-€100 EUR per MWh sale per week on average if you're good at buying low and selling high but lack a crystal ball. So €0.05 per KWh and 2000 cycles still puts you in the red on your battery installation. :( [1] https://www.pnnl.gov/sites/default/files/media/file/Final%20-%20ESGC%20Cost%20Performance%20Report%2012-11-2020.pdf https://www.pnnl.gov/sites/default/files/media/file/Final%20...
- davedx 4y ago
  This is why most BESS's in Europe (and elsewhere) do revenue stacking to be profitable. This means they're not just doing arbitrage of intraday prices, but also providing ancillary services to the grid (so if there's e.g. a fault that causes the grid frequency to drop, a BESS will kick in and start to discharge at a power rate that stabilizes the grid frequency).
- marginalia_nu 4y ago
  There's actually even more volatility than what is revealed in the dayahead table. Check intraday prices. They predictably go down at night and up at day (because while production is unpredictable, consumption is not).
mschuster91 4y ago
Because anything spinning at high RPMs and containing rotational energy is a massive danger to anything around it in any case of failure.
- goodpoint 4y ago
  Massive danger according to whom? By that logic airplanes should not exist.
- marginalia_nu 4y ago
  It's not a much more devastating failure mode than hydro dams, nuclear power plants, even wind power plants. Besides, a flywheel is perhaps best operated underground where the bedrock can absorb the energy if it should fly apart.
- Tagbert 4y ago
  The only installations that I have seen all had significant containment. Also, the rotors were densely wrapped fibers and on impact became a tangled mess that absorbed the kinetic energy. They don’t fragment into sharp, hard chunks.

bjornsing 4y ago

I’ve looked into this. Even sent an email to Amber Kinetics (the flywheel company in the OP) some months back asking for some basic economic parameters, but didn’t get a reply. My conclusion was that simple electricity arbitrage using refurbished lithium ion batteries would be reasonably profitable right now but that business case depends on volatility staying high. The CAPEX is approximately 500 EUR per kWh storage capacity, and you can maybe make 0.25 EUR per kWh and day doing arbitrage. It’s hard to know what the electricity market will look like in the relevant timeframe.

deleted 4y ago
[deleted]
ben_w 4y ago
5.5 years payback time? Yeah, I don’t expect current volatility in European markets last that long. It might, but I don’t expect it.
- bjornsing 4y ago
  Yea, that’s the issue. You also need some more time to pay interest and make a profit.

concordDance 4y ago

You can do the maths for this yourself to find out :) Big utility battery installations are around $400/KWh IIRC and can cope with at least 2000 cycles[1]. Looking at the table you provided it looks like you'd be able to do around €50-€100 EUR per MWh sale per week on average if you're good at buying low and selling high but lack a crystal ball. So €0.05 per KWh and 2000 cycles still puts you in the red on your battery installation. :( [1] https://www.pnnl.gov/sites/default/files/media/file/Final%20-%20ESGC%20Cost%20Performance%20Report%2012-11-2020.pdf https://www.pnnl.gov/sites/default/files/media/file/Final%20...

davedx 4y ago
This is why most BESS's in Europe (and elsewhere) do revenue stacking to be profitable. This means they're not just doing arbitrage of intraday prices, but also providing ancillary services to the grid (so if there's e.g. a fault that causes the grid frequency to drop, a BESS will kick in and start to discharge at a power rate that stabilizes the grid frequency).
marginalia_nu 4y ago
There's actually even more volatility than what is revealed in the dayahead table. Check intraday prices. They predictably go down at night and up at day (because while production is unpredictable, consumption is not).

mschuster91 4y ago

Because anything spinning at high RPMs and containing rotational energy is a massive danger to anything around it in any case of failure.

goodpoint 4y ago
Massive danger according to whom? By that logic airplanes should not exist.
marginalia_nu 4y ago
It's not a much more devastating failure mode than hydro dams, nuclear power plants, even wind power plants. Besides, a flywheel is perhaps best operated underground where the bedrock can absorb the energy if it should fly apart.
Tagbert 4y ago
The only installations that I have seen all had significant containment. Also, the rotors were densely wrapped fibers and on impact became a tangled mess that absorbed the kinetic energy. They don’t fragment into sharp, hard chunks.