MARKET INSIGHT AND BATTERY KNOWLEDGE
WHAT IS A STAND-ALONE ENERGY STORAGE SYSTEM?
Energy storage systems can be applied in a variety of ways, and are first and foremost a key technology for the energy transition. A distinction is made between stand-alone and co-located storages. Stand-alone energy storage refers to energy storage systems that are deployed independently from other assets, such as renewable energy sources or traditional power generation facilities.
CAN A STAND-ALONE BATTERY STORAGE BE PROFITABLE?
Stand-alone battery storage systems can provide a variety of services that can generate revenue, such as ancillary services and arbitrage on wholesale markets.
The profitability of a stand-alone battery storage system depends on various factors, such as the cost of the system, the cost and value of the services it provides, the market and regulatory environment, and the site-specific conditions. In some cases, government incentives or subsidies may be available to support the deployment of battery storage systems, further improving their economic viability.
Batteries are software defined assets - the profitability of the battery storage system therefore relies on the trading software.
WHAT IS SUENAS STAND-ALONE TRADING STRATEGY?
suena's strategy considers all relevant markets for the battery, including trading on power markets and ancillary service markets. To solve the complex problem of determining when and how to use the battery, we apply AI and advanced optimising algorithms to find the most profitable trading strategy for stand-alone battery storage systems.
BATTERY STORAGE SYSTEMS - CO-LOCATED TO WHAT?
Co-located energy storages refer to energy storage systems that are deployed in conjunction with other assets, mainly renewable energy sources. The integration of battery energy storage systems with other assets has become a highly discussed topic worldwide. Such an approach presents an unprecedented opportunity to achieve operational efficiency and sustainable outcomes, with potential positive impacts for both the environment and businesses alike.
WHAT POSITIVE EFFECTS COME WITH A CO-LOCATED ENERGY STORAGE?
By co-locating batteries with renewables, the benefits of smoothing out renewable generation, optimizing the utilization of local infrastructure, and generating additional revenues through higher capture prices (average market prices earned) on a site can be achieved.
MUST CO-LOCATED ENERGY STORAGES BE OPTIMIZED?
To predict generation and trade the battery storage system in collaboration with a renewable energy plant on the electricity markets and ancillary services, intelligent forecasting and advanced optimization algorithms are a must to maximize profits.
WHAT IS WHOLESALE TRADING?
Wholesale electricity trading involves the buying and selling of electricity in bulk between businesses, typically through organized exchanges like the EPEX or Nordpool or bilateral markets (OTC), with the goal of negotiating prices to balance supply and demand.
CAN BATTERIES BE USED FOR WHOLESALE TRADING?
Yes of course – they ideally store electricity at a low price from e.g. renewable sources and shift the energy into times of higher demand and prices. This helps to alleviate fluctuations in the supply of electricity, intelligently match generation with demand and therefore displace fossil fuel-fired generators from the electricity market. The use of batteries for wholesale trading is expected to increase with higher shares of volatile renewable power generation as well as battery technology becoming more widespread and cost-effective.
WHICH WHOLESALE MARKETS DOES THE SUENA AUTOPILOT PARTICIPATE IN?
suena covers all relevant wholesale power markets: day-ahead auctions (e.g. hourly and half-hourly auctions through EPEX and Nordpool in Great Britain) and intraday power markets (e.g. EPEX continuous intraday trading).
WHOLESALE TRADING ARBITRAGE
WHAT IS ARBITRAGE?
Arbitrage refers to the exploitation of price differences between different timesteps through trading at the Day-Ahead or Intraday auctions and the continuous Intraday power market.
HOW DOES SUENA USE ARBITRAGE?
Trading revenues can be further increased without stressing the battery storage system by trading a product between markets or in the same market several times such that volumes neutralize themselves and the battery does not have to be used physically ("financial trades / asset-backed trading").
The storage will first be optimized through the Day-Ahead auction and then the Intraday auction, which takes place daily at 12:00 PM and 3:00 PM for the following day. In contrast to the auction format of the Day-Ahead auctions, the continuous Intraday Market introduces continuous trading. Bids can be submitted anytime during the trading session, depending on the country up to 5 minutes prior to delivery. These open bids are placed in an order book and result in a trade if a price-volume bid matches with another market participant willing to take the opposing side.
WHAT ARE ANCILLARY SERVICES?
As the delivery time of electricity approaches, grid operators are ultimately responsible for maintaining the continuous balance between supply and demand to ensure a stable grid frequency. Therefore, they need flexibility to alter power production and consumption in real-time, the so-called ancillary services. Those flexibility options are procured in different auctions.
WHY ARE ANCILLARY SERVICES CONSIDERED IN THE TRADING STRATEGY?
The multi-use, multi-market strategy - using the battery for wholesale trading in conjunction with providing ancillary services - has proven to be more profitable. As ancillary services put little strain on the battery and they are at times well remunerated, the multi-use, multi-market strategy gives access to a wider range of markets and revenue opportunities.
WHICH ANCILLARY SERVICES DOES THE AUTOPILOT COVER?suena has specialised in tapping into these valuable opportunities for Germany (FCR) and Great Britain (DC, DM, DR).
WHAT IS FCR?
Frequency Containment Reserve (FCR) is a mechanism used to balance the imbalance between power supply and demand to ensure grid stability. Balancing energy is used to compensate for fluctuations in the power grid frequency and to keep it constant at 50Hz. Battery storage systems are able to do both, feed electricity into as well as absorb excess energy from the grid.
HOW DOES IT WORK?
The primary reserve is remunerated based on a capacity price, determined through calendar-day tenders with 4-hour product time slices and a minimum offer size of ±1MW. All successful bids will receive the bid price of the last required bid to fulfil the demand (’Marginal Pricing’/’Pay-as-Cleared’).
SUENAS FCR STRATEGY
Suena bids based on a calculated capacity price that reflects our opportunity costs for each time slice. In case of being awarded, our storage system provides FCR according to the specifications of the transmission system operators. Else the now available capacity is optimized in the other electricity markets with higher revenue opportunities.
WHAT IS SELF CONSUMPTION?
Self consumption refers to the consumption of electricity of renewable power plants during times of little or no output as energy is needed to power its operation for example for controlling units.
USING BATTERIES TO COVER SELF CONSUMPTION
The integration of battery storage systems offers the possibility to utilize stored energy optimized on real-time electricity prices for self consumption rather than relying on costly buy-ins from the grid based on fixed prices. This represents significant revenue opportunities for renewable power plant operators.
SELF CONSUMPTION AS A PART OF SUENAS STRATEGY
Self consumption is considered as an important factor for economic efficiency in the suena Autopilot. In addition to introducing the battery into power and ancillary markets, the use of a co-located battery storage system is also optimized for self consumption, accordance with the multi-use, multi-market strategy.
WHAT IS IMBALANCE MANAGEMENT?
The grid operator must ensure a consistent balance between supply and demand in order to maintain the stability and reliability of the electricity system. The integration of renewable energy sources, such as wind and solar power, into the energy mix presents a unique challenge for grid operators as their generation is dependent on weather patterns difficult to predict. Therefore, imbalance management of renewables is a crucial aspect of ensuring the stability and reliability of the power grid.
As a renewable energy operator, it is important to be aware of the impact that imbalances in the production of electricity can have on the power grid. Imbalances in a balancing group also pose significant financial risks as power producers pay imbalance prices to the grid operator if they are unable to meet the agreed production levels within their balancing group.
WHAT BENEFITS CAN BATTERIES PROVIDE?
By offering optimization of battery energy storage and utilizing advanced forecasting techniques, we are able to help our clients to minimize the risk of imbalances and reduce the associated financial penalties.