Electricity price arbitrage

Utility-scale battery storage has become one of the fastest-growing segments in the U.S. energy market. According to the U.S. Energy Information Administration (EIA), most large-scale battery storage projects in operation today generate revenue primarily through electricity price arbitrage—buying electricity when prices are low and selling it back to the grid when prices are high. Key Findings from the EIA Survey In 2024, the U.S. had approximately 27 GW of utility-scale battery storage capacity in operation. Of this, about 18 GW participated in price arbitrage, and 11 GW were dedicated exclusively to arbitrage. This represents a significant increase from 2023, when 16 GW of capacity was online, with 11 GW engaged in arbitrage and 6 GW dedicated solely to it. The EIA’s annual survey, which collects detailed data from facilities of 1 MW or larger, highlights how the role of battery storage has shifted in recent years. Since 2023, operators have been required to specify the primary use case of their storage systems, providing clearer insights into market trends. Beyond Arbitrage: Other Revenue Sources While arbitrage dominates, battery storage systems in the U.S. also provide a range of other valuable services: Frequency Regulation – 24% of systems are used for stabilizing grid frequency. Renewable Integration – Balancing wind and solar generation to smooth variability. Peak Shaving & Load Management – Reducing demand during peak hours. Co-located Renewable Support – Ensuring stable output from solar and wind farms. Voltage & Reactive Power Support – Enhancing grid stability and reliability. Notably, the installed capacity dedicated to arbitrage exceeds that for frequency regulation by about 4.5 GW, and frequency regulation capacity is about 3 GW higher than that used for balancing renewables. Regional Insights: California and Texas California ISO (CAISO): By the end of 2024, CAISO operated 11.7 GW of battery storage, with 43% primarily used for arbitrage. ERCOT (Texas): Managed 8.1 GW of storage, with half of the capacity focused on arbitrage. These two markets illustrate how regional dynamics shape storage strategies. In California, low-price charging and high-price discharging strategies have proven effective, while in Texas, ancillary services have historically delivered strong returns. The Evolution of Arbitrage Strategies Industry experts note that arbitrage is becoming increasingly complex. As Ali Karimian and Alden Phinney of GridBeyond explained, the rapid deployment of storage has intensified competition, requiring operators to adopt advanced optimization strategies to achieve returns above market benchmarks. In other words, the future of storage profitability lies not in simple buy-low/sell-high tactics, but in integrated, risk-adjusted solutions that combine arbitrage with ancillary services and renewable integration. Looking Ahead The EIA will release updated data for 2025 in June 2026, providing further insights into how storage operators are adapting to evolving market conditions. As the U.S. energy transition accelerates, utility-scale battery storage is proving indispensable—not only for arbitrage but also for enabling renewable integration, enhancing grid reliability, and supporting decarbonization goals.