The Role of Battery Energy Storage in Large-Scale Solar Integration: A Business Case and Policy Analysis for Kosovo

Integrating variable renewable energy sources into power grids poses significant flexibility and stability challenges, making energy storage systems a key pillar of the energy transition. Due to their distinct properties and economies of scale effects in recent years, battery energy storage systems (BESS) are an emerging technology for grid-scale storage applications. Particularly for countries like Kosovo, relying heavily on power generation from lignite with a lack of balancing capacities, BESS can present a valuable contribution to facilitating the integration of variable renewable energy sources such as wind and solar. To understand the potential role of BESS for large-scale solar integration in an emerging energy market context like Kosovo, this thesis combines a profitability analysis for different services with an assessment of the regulatory, policy and market framework in Kosovo. Based on a case study located in Kosovo, four different business cases are calculated in an Excel model: (1) PV only, (2) BESS for energy arbitrage, (3) BESS for aFRR, (4) BESS for aFRR and arbitrage. Contrary to previous research, the results show that BESS costs have decreased enough to achieve economic feasibility for all scenarios including BESS; with the combined use for aFRR and arbitrage (variant 4) as the most profitable option. It is further shown that the operation strategy of a hybrid project (PV and BESS) with a single charging cycle per day using the electricity generated by the solar PV yields the highest results. Expert interviews conducted with stakeholders from Kosovo – including the responsible ministries, the energy regulator, the TSO and international development organizations – were analyzed using the qualitative content analysis by Mayring to identify enabling and hindering regulatory, policy, and market conditions for the implementation of BESS projects in Kosovo. The findings are synthesized in a SWOT structure to provide an efficient overview for policy makers and investors.