Optimal Sizing and Economic Valuation of an Energy Storage System Participating in Joint Energy and Reserve Markets

This paper evaluates the participation of a grid-connected BESS Energy Storage System (BESS), in the Day ahead (DA) and Frequency Containment Reserve (FCR) markets in Europe. Through annual simulations, the study demonstrates the substantial revenue potential of providing multiple services (DA+FCR) by a single BESS, resulting in a significant 74% increase compared to the sum of individual markets’ participation. Furthermore, a comprehensive sensitivity analysis is conducted to determine the optimal sizing of the BESS, revealing the advantages of higher power-to-energy ratios in terms of profitability and payback periods. An oscillation penalty is introduced to mitigate the BESS degradation by reducing the BESS’s depth of discharge. This leads to a reduction of BESS capacity fade behavior by 7 % while incurring only a marginal 9 % loss in the annual revenues. These findings contribute valuable insights for decision-making in deploying grid-connected batteries, considering revenue optimization and BESS performances.