| dc.description.abstract | In response to the urgent need to reduce global carbon dioxide emissions and mitigate climate change, the Netherlands has committed to significant reductions in CO2 emissions by 2030 and 2050. This necessitates the rapid expansion of low carbon energy sources, including solar photovoltaic (PV) energy. However, the increase in intermittent renewable electricity supply poses challenges in managing the grid, leading to grid congestion and supply-demand mismatches. To address these challenges, Battery Energy Storage Systems (BESS) have emerged as flexible storage solutions. BESS offer various applications, including peak shaving and participation in markets such as the automatic Frequency Restoration Reserve (aFRR).
This thesis investigates the economic potential of BESS participating in the Dutch aFRR market. The research examines three key questions: how BESS deployment strategies can be modelled to optimize economic performance, what combination of strategies yields the highest economic performance, and how financial performance changes in response to fluctuating market prices. The methodology involves developing a Python model to simulate BESS operation and revenue potential based on market prices, battery costs, and other relevant variables. The model considers factors such as state of charge management, yearly revenues, and battery costs.
Results indicate that an intermediate deployment strategy, coupled with dynamic electricity bidding thresholds, offers optimal economic performance. The intermediate strategy demonstrates a balance between revenue generation and operational longevity, outperforming both conservative and aggressive approaches. Additionally, the study highlights the importance of considering factors such as capacity bid winning share and price fluctuations in assessing BESS profitability.
However, the research acknowledges certain limitations, including the simplification of capacity fee bidding processes and the exclusion of certain costs such as transport tariffs and network fees. Future research should address these limitations by incorporating detailed cost structures and exploring the impact of different connection configurations on project economics.
In conclusion, this study provides insights into the economic feasibility of BESS deployment in the Dutch aFRR market. The findings offer practical implications for battery operators and policymakers, emphasizing the attractiveness of the aFRR market as a business proposition for BESS deployment. By considering broader financial contexts and operational dynamics, this research aims to guide decision-making processes and contribute to the advancement of BESS deployment strategies in energy markets. | |
