Economic evaluation of battery storage systems participating in the day-ahead and automatic frequency restoration reserves markets

The electricity system transformation requires fundamental changes in power plant parks. Ambitious targets for the reduction of green-house gas emissions do not only result in a change of electricity generation technologies, but also frequency stabilization has to be provided by low-carbon technologies. Batteries are a promising technology to fill this gap. However, uncertainties regarding the revenue potential of such use cases may hinder investments in such technologies. Therefore, we apply the agent-based electricity market model AMIRIS to simulate energy prices on the German day-ahead and automatic Frequency Response Reserve markets in order to assess the economic potential of storages participating in both markets. First, we compared our model results with historic data from 2019. The back-testing resulted in mean prices of 39.22 EUR/MWh in the simulation compared to mean historic price of 37.67 EUR/MWh showing a slightly higher price level for simulated prices. Second, we modelled the day-ahead market and capacity prices for the automatic frequency restoration reserves (aFRR) in a future scenario for Germany in 2030. The simulated day-ahead market prices are on average higher than historic values, although, we observe around 550 hours per year in which the load can be fully covered by renewable energies. We then evaluate the revenue potential of battery storage system operators selling their flexibility capacities in combined use on the day-ahead market and aFRR markets. Compared to historic market data, we see a reduced economic potential in our scenario. Regarding the technical specifications, we find that high power battery storage systems perform best in the presented scenario. Improvements in round-trip efficiency only marginally improve the annual revenues.