Unlocking the Potential of Battery Storage with the Dynamic Stacking of Multiple Applications

TLDR

Battery energy storage systems can serve multiple applications, offering a promising path toward sustainable energy, but high investment costs and limited profitable scenarios currently hinder deployment. The study develops a multi‑use optimization framework that distinguishes behind‑the‑meter and in‑front‑of‑the‑meter applications while allocating both power and energy capacities. The framework employs a rolling‑horizon optimization with an integrated degradation model, using real‑world data from a stationary lithium‑ion battery in Germany. Dynamic stacking of applications makes profitable BESS operation viable, with peak shaving plus frequency containment reserve yielding an NPV of 1.00 per Euro invested and 1.24 when adding intraday arbitrage trading.

Abstract

The ability of a battery energy storage system (BESS) to serve multiple applications makes it a promising technology to enable the sustainable energy transition. However, high investment costs are a considerable barrier to BESS deployment, and few profitable application scenarios exist at present. Here, we show that by tapping into multiple revenue streams using the dynamic stacking of applications, profitable operation is viable under current regulatory conditions. We develop a multi-use optimization framework which distinguishes between behind-the-meter and in-front-of-the-meter applications and considers how power capacity is allotted in addition to energy capacity allocation. The algorithm uses a rolling horizon optimization with an integrated degradation model and is fed with real-world data from a stationary lithium-ion battery in Germany. When combining peak shaving with frequency containment reserve, a net present value per Euro invested of 1.00 is achieved, and 1.24 with the addition of arbitrage trading on the intraday continuous market.