Borge

Since the rapid decline of the FCR-D market in Sweden earlier this year, doubts have arisen about the profitability of investing in battery energy storage systems (BESS). However, the data clearly demonstrates that BESS remain a sound and resilient investment. By leveraging trading strategies across multiple markets, known as value stacking, BESS continue to deliver strong returns on investment (ROI) for both investors and operators.

Henrik Krogsæter, Product Manager for On-grid applications at Pixii explains ROI of BESS in Sweden

Leverage the market opportunities

BESS investments in Sweden thrive when operators adopt a comprehensive approach to leveraging market opportunities. Batteries excel in their versatility, offering operators the ability to trade across multiple markets, including intraday, day-ahead, FCR-D, FCR-N, FFR, aFFR and mFRR.

Each market offers unique opportunities to maximize the profitability of BESS in Sweden:

Intraday and day-ahead markets: Enable operators to capitalize on short-term fluctuations in energy prices, providing consistent arbitrage opportunities.
FCR-D and FCR-N markets: Crucial for frequency regulation, rewarding batteries for their rapid response to grid demands.
FFR (Fast Frequency Reserve): Supports grid stability by addressing sudden imbalances.
aFRR and mFRR markets: Offer additional flexibility by compensating batteries for delivering power or reducing consumption during specific times.

By participating across these diverse markets, BESS owners can strategically stack revenues, ensuring robust and resilient income streams. If one market underperforms, others generate revenue, diversifying income streams and reducing risk.

Partnering with experienced aggregators further enhances profitability. Aggregators dynamically optimize trades, allocating battery capacity to the most profitable markets at any given time, ensuring consistent returns.

As society electrifies and renewable energy takes a larger share of the energy mix, grid infrastructure faces growing challenges in stability and reliability. Battery energy storage systems (BESS) are key to meeting these demands. Their ability to balance supply and demand, stabilize the grid, and seamlessly integrate renewable energy ensures they remain profitable and essential.

Adapting to falling FCR-D prices

The sharp decline in FCR-D prices in Sweden since April has made simple (one-market) energy trading less profitable. This shift highlights the importance of adopting more advanced trading strategies to secure consistent returns and maximize the value of BESS.

A profitability case study: August 6th

August 6th serves as a compelling example of BESS profitability in southern Sweden. Power prices fluctuated significantly throughout the day, offering multiple trading opportunities across different markets:

Energy arbitrage in intraday and day-ahead markets: A 1MW battery could earn €250 in just four hours of trading.
Revenue from FCR-D markets: Even with lower FCR-D prices, participation would yield €164.
FCR-N market opportunities: Traditionally dominated by hydropower, FCR-N markets are becoming increasingly viable for batteries, with revenues from both capacity and activation payments.

It is the combination of income-generating battery services at given date and time that will justify an investment in BESS.

Maximizing earnings with a combined strategy

A combined trading strategy can significantly boost profitability. On August 6th, an optimal approach might have included:

Overnight trading: Leveraging FCR-N opportunities.
Morning arbitrage: Capitalizing on intraday market peaks.
Daytime FCR-D trading: Taking advantage of low-price charging periods.
Afternoon arbitrage: Profiting from evening price peaks.
Evening FCR-N trading: Wrapping up the day with further FCR-N opportunities.

With such a strategy, a 1 MW BESS could achieve total daily earnings of €450, translating to approximately €200,000 annually.

Unlocking potential through dynamic value stacking

Securing strong returns on investment starts with dynamic value stacking—combining multiple revenue streams through strategic market participation. Partnering with a balance responsible party (BRP) or aggregator unlocks the full earning potential of your battery, ensuring intelligent and optimized trades across markets.

The optimal value stack looks different based on location, application and market.

At Pixii, we are committed to maximizing the value of your investment by partnering with the most experienced aggregators and brokers in every region. These partnerships ensure you gain access to the best possible trading opportunities and market insights tailored to your BESS.

By leveraging the expertise of these trusted collaborators, Pixii enables you to optimize market participation, dynamically allocate your battery’s capacity, and secure the most profitable deals available. Together, we ensure your system operates at peak efficiency, delivering consistent and significant returns.

Resilience and maximized returns with Pixii

Battery energy storage systems (BESS) continue to represent a profitable and essential investment in the Battery energy storage systems (BESS) remain a profitable and essential investment in the Nordic energy market, especially with a strategic approach. At Pixii, we focus on delivering both immediate profitability and long-term value with solutions designed for resilience and sustainability:

Modular design: Simplifies battery replacements with minimal operational disruption.
Future-proof technology: Seamlessly integrates new battery types and advancements.
Cost-effective upgrades: Declining battery prices ensure future upgrades are economical.
Sustainability: Includes environmentally friendly options for recycling or repurposing old batteries.
Optimized ROI: Long-term profitability is built into our replacement and upgrade strategies.

With this comprehensive approach, Pixii ensures your BESS stays ahead in a rapidly evolving energy landscape. As the Nordic region transitions to a more electrified and renewable-powered future, battery energy storage systems will remain central to this shift.