[Zanfa]

Last time I ran the numbers for this, price arbitrage alone using lithium batteries is not gonna be profitable.

Current lithium batteries are just too expensive, store too little energy and degrade too quickly for true grid-scale storage.

That’s why they typically offer services, other than price arbitrage, that actually makes building them make sense. There’s still no equivalent of a peaker plant using non-hydro storage.

[mdorazio]

Your numbers are likely outdated. The Tesla grid battery installation in Australia was so profitable that Neoen is building more as fast as it can: https://reneweconomy.com.au/neoen-aims-for-big-batteries-in-...

[slyall]

The Australian battery isn't just making money from Arbitrage. It makes most of it from "Frequency control ancillary services (FCAS)".

"80-90% of battery revenues have been coming from FCAS and about 10-20% from energy trading."[1]

I would assume the amount of FCAS capacity needed will be fairly limited so the economics of additional batteries won't be as good.

[1] https://www.energy-storage.news/batteries-are-number-one-at-...

[jillesvangurp]

Lots of energy companies across the globe seem to be disagreeing with you and are installing massive amounts of battery storage. Gas peaker plants are getting used a lot less on grids where this happens.

Reason: your numbers and assumptions are probably wrong.

[Zanfa]

Or, like I mentioned in my comment, price arbitrage is not the primary source of profit.

[paganel]

One could have said the same thing 2 or 3 years ago about companies active in the renewable energy space like Orsted. I mean, they were one of the biggest producers of wind-turbines, what was there not to like in this ESG-focused investment environment? Until the numbers suddenly stopped making sense for them a few weeks ago [1].

Which is to say that the investment numbers may look "right" for a good few years until they suddenly don't and the reality catches up with all those involved.

[1] https://archive.is/w8VCk

[epistasis]

It wasn't a "reality" check from having inaccurate estimates, it was rising interest rates that put a huge damper on the cost of projects where all the expense is front-loaded.

[paganel]

Higher interest rates are part of the game, or of reality, if you want to put it that way. So, yes, it was a reality check and it has proved that that company could only be viable under very particular economic circumstances (i.e. interest rates being close to zero)

[epistasis]

Whoa, their viability as a company is not under question.

The only thing under question is whether future long-term agreements will include inflation protection.

When interest rates rise tremendously, long term investment gets pulled way back. That's the entire point of hiking interest rates, to make companies like Orsted slash their growth rates. It does not put Orsted at risk for collapse.

[paganel]

They've had a ~70% share price fall since the height of 2021, 40% lower compared to the summer of last year, of course that their future (at least as an independent company) is under threat, saying otherwise is just wishful thinking.

> That's the entire point of hiking interest rates, to make companies like Orsted slash their growth rates.

I highly doubt that that's the discussion being held at the meetings where the rates are being set, i.e. I've never heard the likes of the US Fed or of the ECB saying "we want to slow our most dynamic sector of the economy by increasing interest rates", but I could be wrong on that.