A Comprehensive Analysis of Potential Revenue and Breakeven Viability of Energy Storage in the Day‐Ahead Market of MISO

ABSTRACT This study investigates the economic feasibility of Energy Storage Systems (ESS) in volatile market nodes within the Midcontinent Independent System Operator (MISO). As MISO transitions from a coal‐dominant energy mix to a more diverse composition of natural gas and renewables, new arbitrage opportunities for ESS emerge, particularly at nodes like ALTW.SPRVAUN1 and NSP.FRENCH3. Utilizing a linear optimization model with perfect price forecasting, the study estimates the potential arbitrage revenues from these nodes from 2008 to 2014 and then from 2020 to 2022. The sensitivity analysis indicates that current market conditions do not favour immediate profitability for ESS due to high relative battery costs. However, projections up to 2030 reveal a potential shift. With battery costs expected to decrease and electricity price volatility likely to increase due to the growing presence of renewables, the future profitability of ESS appears promising. This is particularly evident in the breakeven analysis, which predicts that NSP.FRENCH3 might reach financial viability before 2030, with ALTW.SPRVAUN1 closely following. Conclusively, the study emphasizes the need for ESS operators to adopt flexible strategies, considering long‐term market evolutions. The ongoing shift towards renewable energies in the MISO market suggests an advantageous future for ESS, especially in capitalizing on the forecasted market volatility.