Below is an independent view of the revenues of a 2-hour energy storage system in Germany. The objective is to establish this index as a benchmark for assessing historical and current revenue performance of energy storage systems. It shows 365-day rolling average revenues from Trading, FCR and aFRR capacity market as well as results from “Daily Optimization”.
Index Calculation Methodology
The underlying battery system has the following parameters:
- 2 hour duration (usable capacity)
- Max. 2 full cycles per day @ 100% DoD of usable duration allowed
- 90% AC/AC roundtrip efficiency
The values in these charts are 365-day/30-day rolling averages of the underlying revenues on an annualized basis. The assumptions and methodology to calculate the index values for the different trading strategies are provided below.
FCR Capacity Revenues
The index considers the local marginal capacity price (€/MW) from FCR capacity auctions in Germany. To account for SoC management, only 80% of the battery power is sold in the FCR market. No cost for SoC management is considered.
aFRR Capacity Revenues
The index considers the mean capacity price (€/MW) from aFRR capacity auctions in the German/Austrian bidding zone. The battery can participate in positive and negative aFRR. Bid acceptance is assumed to be 100%. For each 24h optimization period, 100% of the battery capacity can be sold either in positive or in negative aFRR. No activation revenues are considered.
Trading Revenues
The index considers revenues from physical energy arbitrage. The system is optimized using the ID1 price from continous trading of 15-minute products as published by EPEX SPOT with linear optimization and perfect foresight. The optimization is carried out for one day at a time and the battery SoC needs to reach an SoC of 50% at the end of each day. No asset backed (virtual) trading is considered.
aFRR & Trading Strategy
For this dispatch strategy, symmetrical aFRR provision and energy arbitrage trading are combined. 50% of the battery power is sold in the aFRR market (positive & negative in parallel), while the rest is used to buy and sell energy in the intraday market. The current implementation of this strategy uses up to four cycles per day on half of the battery capacity for trading. No revenues from aFRR activation are considered.
Daily Optimization
To calculate the “Daily Optimization” revenues, the algorithm picks the market with the highest revenue from the above trading strategies for each day with perfect foresight. No optimization between markets within a day is considered. The cycle budget is not fully used if the battery is dispatched in FCR or aFRR.
If you are intersted in using the index or would like to receive access to the data, please feel free to reach out!