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Exploiting the Potential of Battery Storage through Intraday Trading

Updated: Feb 27

Battery storage has become a hot topic in the modern energy landscape, especially with the growth of renewable energy sources such as solar and wind power. The following article unveils why intraday trading makes battery storage more bankable and profitable.

Volatile Intraday market

Besides over-the-counter contracts, intraday trading in Central Europe takes place on the EPEX spot market in Paris. Intraday trading offers short-term coverage for energy suppliers, allowing quarter-hour contracts for the following day. Unlike day-ahead trading, it also permits trading continuously for up to 5 minutes before physical delivery. Another distinctive feature of intraday trading is, that no real unit prices exist. Unlike day-ahead trading and intraday auctions, the pay-as-bid procedure is used instead of the merit order principle. That means that different bids can be submitted simultaneously for different power supplies, resulting in different prices.

Electricity consumption and renewable energy generation in GW and electricity price in €/MWh in Germany on 02.07.2023
Electricity consumption and renewable energy generation in GW and electricity price in €/MWh in Germany on 02.07.2023, source:

The price range for one MW is -9999 to 9999€, so negative market prices can also occur. The growth of renewable energies has resulted in negative electricity prices no longer being a rarity. Since the increasing use of renewables has made supply predictions more complicated, the price volatility on the Intraday market has increased steadily. The chief cause is the unpredictable nature of solar and wind energy, which fluctuates over time.

Intraday markets require flexibility

In its prime function, the intraday market ensures grid stability by absorbing unpredictable changes in power production and demand, thus minimising the use of frequency capacity reserve. For traders, it serves firstly to balance their balancing group, as surpluses and deficits in the balancing group lead to high balancing costs. In addition, intraday trading is interesting for operators of energy storage facilities to profit from the high price spreads and thus sell their (own) electricity profitably.

Large-scale battery storage absorbs and releases power within milliseconds. That is why battery storage has been used in most cases for balancing the power grid frequency in the last few years. After economically favourable times in the frequency capacity reserve market (FCR) until 2019, prices have plummeted. Even though prices have risen to peak then, we should consider that a storage facility specialised only in the FCR market will remain unused for the lion's share of time.

Battery storage operators will therefore have to adopt more complex multi-market strategies in the future. But this will allow them to benefit greatly from the spot markets. Especially for decentralised storage in connection with renewable energy plants, this is an opportunity to maximise the profit from selling their own electricity.

Optimize revenues - battery storage and Intraday trading

A profitable operation of battery storage requires a more sophisticated trading strategy that exploits the storage capacities of the batteries and takes into account various factors, such as the number of charging cycles. Many application possibilities, such as self-consumption, balancing group management or peak shaving, are also relevant for many operators. One such solution is made by suena, a modern trading algorithm software that uses real-time optimization, digital twin technology, and a genetic algorithm. Suena is currently being tested in various projects with energy industry partners and is expected to be deployed in the market this year.

In conclusion...

The expansion of renewables must go hand in hand with the expansion of battery storage, and the increasing price spreads of the intraday market offer an opportunity for battery storage to be more profitable. A multi-market approach requires optimising solutions like suena. Especially renewable energy- power plant operators with storage capacities can benefit from the price spreads on the intraday market, accelerating the transition to a more sustainable energy future.

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