Economic Value of Multi-Market Bidding in Nordic Frequency Markets

Abstract

Battery energy storage systems (BESS) can be used for ancillary services like frequency containment reserve (FCR), which can generate a significantly higher revenue than energy arbitrage. Different FCR services differ in revenues and energy throughput, which induces costs due to conversion losses, tariffs, but it also leads to a significant number of battery cycles that reduce the battery capacity over time. The normal operation reserve (FCR-N) had the highest revenues in the past years, but comes along with a higher energy throughput than the disturbance reserve (FCR-D) which also has a lower price. Based on the Nordic regulatory frame work with 5 years of market and tariff data, the present study demonstrates that by choosing the most profitable service for each hour it is possible to reduce the number of charge cycles with 51% and increase the operating profit with 22% compared to delivering pure FCR-N.