| dc.description.abstract | The increasing penetration of renewable energy sources for electricity generation has made it increasingly difficult to match supply and demand on the grid. This creates an increasing demand for flexible power to respond to grid needs. A battery energy storage system (BESS) is an example of a flexible asset.
First, the added value of BESS for the electricity system was investigated. It can be concluded that adding BESS for grid stabilization reduces the imbalance price and thus makes renewable energy projects more financially attractive due to lower imbalance costs. A BESS can contribute to imbalance cost reduction in two ways: actively or passively balancing. Active means that participation is preselected through bidding, with the transmission system operator (TSO) providing the connection and activation. Passive balancing means a voluntary contribution to grid imbalance, stimulated by live publication of imbalance prices. The entry of BESS reduces imbalance costs for both forms of balancing, compared to a scenario where batteries do not enter. In the general sense of grid stabilization, it can be said that active balancing is more efficient way of balancing, however, creates a smaller supply of available power overall.
The provision of active balancing power, is done through the automatic frequency restoration reserve market (aFRR). However, the choice deployment for BESS should not only be made on the basis of grid stabilization, there should also be responsible financial compensation in return.
This thesis research investigates how a BESS can bid into the aFRR market with its full power and the added value of this market on a battery's business case. Using literature and published documents from TenneT, the conditions a BESS must meet to be able to bid its full power have been identified. It has been found that a BESS can offer its full power by applying charge management supported by an intraday energy transaction Next, this study examines the data flows required in Scholt Energy organizational structure to make this possible. From this, it appears that the current organizational structure allows for the control of aFRR combined with intraday charge management, but means that data communication of purchased intraday deals goes through Scholt Energy. Technical simplification and the added value of market stacking occurs the moment it is possible to connect to the extended crowd balancing platform (CBP) for aFRR delivery. Here the involved parties for aFRR delivery, intraday charge management and BESS control are all connected.
After having established how a BESS can legally and organizationally participate with its full capacity in the aFRR market, the possible financial outcome has been investigated. This involved investigating the returns of different battery dimensions (being different power to storage ratios) on the aFRR market. This was done by modelling four bidding strategies. The models were run based on the historical revenue achieved in 2021, 2022 and 2023, where 2023 outcomes were based on the first quarter and extrapolated. From the outcome it can be indicated that in 2022, BESS revenues on aFRR were highest, followed by 2023 and lastly 2021.
Revenue from just the aFRR market needs to be put into perspective against other markets to which the battery has access. The comparison model compares the revenues of the aFRR revenue model with historically achieved revenues of a battery in the Frequency Restoration Reserve (FCR) and imbalance market. This shows that the aFRR market does give a significant increase on a battery's revenues, even when the balance Service Provider (BSP) does not have perfect foresight on the profitability of each market. For a future scenario, this effect is even greater.
This same effect can be seen for payback period of the BESS. Here, it has been found that the payback time of a BESS .... | |
