From consumer to active participant: the new role of battery owners in the energy grid

BESS technologies, or energy storage battery systems, have attracted considerable interest among businesses. A connection to the power grid and a capacity of at least 100 amps – sufficient for a large private home or small shop – is enough to participate in grid stabilization. This offers businesses a double benefit: the opportunity to reduce their own costs and increase their income.

What does the user gain from BESS technology?

Joining the European energy grid has created a need for additional capacity to stabilize the grid, i.e., to ensure a balance between energy consumption and production. In this process, it is crucial to have the flexibility to immediately meet peak demand and also store excess energy. This has led to the emergence of energy storage batteries, or BESS systems, which, together with smart software, enable participation in all newly opened grid frequency stabilization markets and generate revenue.

BESS enables efficient energy storage, not only reducing electricity consumption costs, but also generating additional revenue by participating in frequency containment (FCR) and frequency restoration (aFRR and mFRR) markets, – namely, by selling their reserve capacity to stabilize the power grid and receiving additional compensation for flexible consumption.

The energy company Enefit has calculated how much a battery user could have earned in June by trading the electricity they produced and stored. In June, a 1 MW/2MWh battery could have earned around €6,800 on the Baltic day-ahead market. If the same battery had participated in all available electricity markets (aFRR, mFRR, FCR and day-ahead market) in June, it could have earned up to €55,000.

For now – an investment with a quick payback period

Rihards Kotlers, member of the board of energy company Enefit and head of the Energy Solutions Department, says that entrepreneurs' interest in energy storage batteries is currently about the same as it was two or three years ago for solar panel systems.

"Both large and small companies in a wide variety of industries, including those completely unrelated to energy, are interested in this new technology as a way to diversify their income. We are approached by farmers, metalworking companies, warehouse complex managers, traders, and car service owners. Admittedly, interest is one thing, but decision-making is another, much longer process, because you have to be prepared to invest: even the smallest system costs at least €50,000, but on average you should expect to pay around €500,000," says Rihards Kotlers.

Current estimates show that battery systems pay for themselves in an average of 3-5 years. The return on investment calculations are based on the assumption that the most efficient period of operation is 20 years.

"It takes about 9-12 months from the start of the project to the installation of the system. Currently, the most time-consuming stage is ensuring the network capacity: often the distribution network has to be rebuilt, so design and preparation take up the lion's share of the work. But once that is done, the system will pay for itself within a few years – the speed depends directly on the amount of renewable resources connected to the grid. We are at the very beginning of the road, and this process will definitely pick up speed as the amount of renewable energy grows, but each megawatt of solar energy added will require a megawatt of battery capacity, so the more batteries are added to the grid, the more stable it will be," emphasizes Rihards Kotlers.

Grid stabilization is not only an issue in the Baltics, which only this year gained energy independence from the Russian grid, but also throughout Europe, as CO2 quota prices are stimulating a large influx of renewable energy. A recent real-life example was Spain and Portugal, which were left without electricity for almost 24 hours because the share of renewable resources was not balanced with the capacity of the grid.

The importance of the "brain" or smart algorithm

Although the installation of the equipment is fairly simple, there is a particularly complex element in the operation of BESS – control and management. "You can install a battery, but then what? It doesn't earn money on its own – the algorithm does, and it has to be developed individually for each battery, taking into account cybersecurity requirements and a number of other important details. Each algorithm ensures a connection between three players – the high-voltage grid, the service provider and the battery owner – continuously measuring the energy flow and matching it with financial decisions. A good algorithm is one that results in maximum benefit for the entrepreneur," explains Rihards Kotlers.

The algorithm developers offer innovative software that provides access to new balancing markets, analyzes market price changes using artificial intelligence, and optimizes energy flows. With the help of this software, any company with its own electricity-consuming or producing equipment can participate in system regulation by reducing or increasing its consumption as required by the high-voltage grid and receive compensation for such flexible consumption. Rihards Kotlers points out that there are not many players on the market offering battery system control software, and Enefit is currently the only one providing a full cycle from design and installation to software development, warranty and equipment maintenance.

Battery systems and participation in grid stabilization are the most effective response to energy challenges. "Europe's most developed markets, such as the Nordic countries, which liberalized the frequency market a decade ago, have reached a level of regulation where these markets activate in milliseconds, while we are still talking about several seconds. But we will get there in a year or two, we are all heading in the same direction," says Rihards Kotlers with conviction.

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