Aymeric Fabre, a researcher affiliated with the University of Queensland, has delved into the critical role of price forecasting in optimizing the trading of battery energy storage systems (BESS) in electricity markets. His work focuses on the Australian National Electricity Market (NEM), where grid volatility is increasing due to the integration of renewables and market decentralization.
Fabre’s research addresses a significant gap in the current market: while the Australian Energy Market Operator (AEMO) provides price forecasts, there is no established framework to evaluate their reliability or incorporate them into practical BESS trading strategies. His study systematically analyzes patterns in forecast accuracy based on time of day, forecast horizon, and regional variations. This analysis forms the basis for a novel, forecast-informed BESS trading model designed to optimize arbitrage financial returns.
The performance of this forecast-driven algorithm is benchmarked against a basic trading algorithm that operates without knowledge of forecast data. The results demonstrate the potential for improved profitability when leveraging accurate price forecasts. Additionally, Fabre explores the use of machine learning techniques to enhance AEMO forecasts, aiming to develop even more advanced trading strategies.
The practical applications of this research are significant for the energy sector. As battery storage becomes increasingly integral to grid stability and renewable energy integration, accurate price forecasting can enhance the financial viability of BESS projects. This, in turn, can accelerate the adoption of energy storage solutions, contributing to a more resilient and efficient electricity grid.
Fabre’s findings were published in a thesis titled “Optimising Battery Energy Storage System Trading via Energy Market Operator Price Forecast,” highlighting the importance of leveraging forecast data to inform trading decisions and improve the overall efficiency of energy markets.
This article is based on research available at arXiv.