Revenue Stacking for BESS: Fast Frequency Regulation and Balancing Market Participation in Italy

Abstract

Battery energy storage systems (BESS) are considered a relevant flexible resource for supporting the balancing of a RES-penetrated power grid. Since their cost structure is characterized by very high capital costs, it is of utmost importance to ensure efficient and effective operations from a techno-economic perspective. The possibility of services (and revenues) stacking is one of the most discussed optimization solutions. The present work provides a novel approach for BESS modeling, including the stacking of two diverse ancillary services, a dedicated balancing market bidding model, and a state-of-charge management strategy. Fast frequency regulation is proposed as a power-based service, requiring large ramping capability, but asking BESS activation just for a limited amount of time. For the remainder, BESS power can be traded on balancing market (BM): energy-based services, such as tertiary regulation, could be effectively coupled with power-based, fast regulations, increasing the economic attractiveness of investments in BESS. The case of fast reserve (FR), a new high-speed frequency response service proposed by the Italian TSO in Italy, is assessed in this study. FR provision foresees a capacity-based remuneration (k€/MW/year) and requires to ensure 1000 hours per year of availability. After assessing its cost-effectiveness as a stand-alone service, a sequential multiservice strategy is proposed, where BESS provides FR for 1000 hours, while for the rest of the time it is dedicated to the provision of replacement reserve (RR). Performances of BESS are evaluated considering the reliability of the provision, its operational efficiency, and investment’s economics. Performed tests demonstrate how, within the current Italian regulatory framework, the investment’s rate of return improves thanks to the multiservice approach. In particular, while maintaining a proper reliability, the minimum acceptable remuneration from FR yearly auctions decreases by 13%; at the same time, self-dispatching of energy through BM calls reduces the need to purchase energy on day-ahead market and keeps BESS state-of-charge far from saturation regions, thus also increasing its lifetime.

Energetic and Economic Performances of the Energy Community of Magliano Alpi after One Year of Piloting

“…At this juncture, there are difficulties regarding the calculation of the energy that would be incentivized and not subject to grid charges; this indecision does not allow for certain planning of investment in a storage system that considers both the benefits of self-consumption and energy sharing. Battery storage systems can be used to provide flexibilities services [40][41][42], which are remunerated in a competitive market, hence a more thorough analysis of such possibilities should be conducted when considering the introduction of BESS, whether it be a centralized community ESS or provided by batteries equipped in electric vehicles. However, the introduction of a storage system is not necessary if synchronization of electricity demand and production is technically feasible [43]; this is another reason why a careful study phase is necessary before the implementation of a REC [44].…”

Battery Energy Storage System Performance in Providing Various Electricity Market Services

“…The participating units provide power within 1 s. Currently, only energy sources with qualified power in the range of 5-25 MW are allowed to participate in this service. The provision of FR is based on a droop curve [37]. The units participating should provide the qualified power in response to the frequency deviations in 30 s. In case the frequency deviations have not exceeded the limits set by "level #2", the fade-out can be activated, and the unit decreases the output power gradually in 300 s. On the other hand, if the highlighted frequency limits are violated, the unit must provide the full qualified power for at least 15 min.…”

“…In [37], Rancilio et al developed a BESS model to evaluate a techno-economic analysis of the provision of two sequentially stacked ancillary services: FR and RR. The analysis pointed out that the efficiency and the Internal Rate of Return (IRR) improved with revenue stacking.…”

A State-of-the-Art Review on Optimization Methods and Techniques for Economic Load Dispatch with Photovoltaic Systems: Progress, Challenges, and Recommendations

“…Regulating reserve, often known as automatic generation control, is used to automatically balance the continuous and frequent changes in the demand and generation side [93]. This method can rectify the variations in the shortest possible time ranging from 5 min to an hour.…”