Luis van Sandbergen, a researcher affiliated with the University of Duisburg-Essen in Germany, has published a study that explores how Battery Energy Storage Systems (BESS) can be optimized for energy arbitrage, a process that could significantly benefit the renewable energy sector.
The study addresses the challenge of integrating BESS into the energy market, particularly for energy arbitrage, where batteries charge during low wholesale electricity prices and discharge during high prices to capitalize on price differences. This process is not straightforward for many companies due to the unique behavior of storage systems compared to conventional power plants. Van Sandbergen’s work proposes a generic framework for trading integrated BESS operation, develops a suitable backtest engine, and formulates a specific optimization-based strategy for cross-market optimized BESS operation.
The proposed strategy was tested in a case study, which included a sensitivity analysis to examine the impact of forecast uncertainty. The results indicated that the strategy could increase revenues by leveraging increasing market volatility. Moreover, the sensitivity analysis demonstrated the robustness of the strategy, as only a moderate portion of revenues would be lost if real forecasts were adopted.
This research, published in the journal Applied Energy, offers practical applications for the energy sector. By optimizing the operation of standalone BESS in energy arbitrage, the study provides a pathway to enhance the integration of renewable energy sources into the grid. This can help counteract the intermittency of solar and wind generation, making renewable energy more reliable and sustainable. The proposed strategy and framework can guide energy companies in maximizing the economic benefits of BESS, ultimately supporting the transition to a more sustainable energy future.
The study’s findings are particularly relevant for energy traders, grid operators, and renewable energy project developers. By implementing the proposed optimization strategy, these stakeholders can improve the economic viability of BESS projects, thereby accelerating the adoption of renewable energy technologies.
This article is based on research available at arXiv.