Co-optimizing aFRR Energy Bidding and Intraday Trading for Battery Energy Storage Systems

Abstract:
Battery energy storage systems (BESSs) are a key technology for integrating large amounts of renewable energy into our energy systems. In order to make this type of energy storage attractive to investors, it is crucial to maximize its earning potential. As well as energy arbitrage in spot markets, BESSs can operate in balancing markets, providing either frequency containment reserve (FCR) or automatic frequency restoration reserve (aFRR). As the former is becoming increasingly saturated with BESSs, the focus is shifting to the latter. The aFRR market includes a separate energy market on the day of delivery, in addition to its day-ahead capacity market. This energy market operates in parallel with the intraday electricity market (IDM). This motivates research into simultaneous participation in both markets and how synergies can be exploited. For this reason, this study first examines aFRR activation and then presents a dispatch framework for bidding in the aFRR energy market, based on the opportunity cost of intraday energy arbitrage. The proposed dispatch framework is then validated by a simulation study with the actual activated aFRR and the results are presented. The simulation shows that a revenue of Euro 706,235.5 could be achieved in 2024 with this dispatch strategy under these specific conditions. It thereby demonstrates how a BESS can exploit synergies between the IDM and aFRR energy markets.