More revenue from trading with battery storage

The integration of stationary battery storage in commercial and industrial projects is becoming increasingly attractive, not only due to self-consumption optimization or network fee reduction but also through additional revenues in the electricity market. Those who plan storage solutions as project developers today should consider the opportunities and challenges of market integration from the very beginning.

Options for Market Participation for C&I Battery Storage

Industrial and commercial enterprises can use battery storage in various ways for market participation. There are fundamentally two models:

• Hybrid use of the same battery for Behind-the-Meter (BTM) and Front-of-Meter (FTM) – i.e., a single battery storage system handles both internal operational tasks (e.g., peak shaving, self-consumption optimization) as well as grid or market services (e.g., provision of balancing power, electricity trading).

• Use of separate battery storages for BTM and FTM – i.e., two separate storages: one is dedicated to internal company purposes, while the other is exclusively operated for the electricity market (as a standalone system with grid connection).

Comparison: Hybrid Dual Use vs. Separate Storages

To compare the two approaches, Table 1 shows the main characteristics, advantages, and disadvantages:

Table 1: Comparison of dual (hybrid) use of the same battery vs. separate BTM and FTM storages.

In many cases, the dual use of a battery storage appears beneficial, as both energy costs can be lowered and new revenues generated. For example, an industrial storage can absorb solar surpluses during the day and shave load peaks in the evening, while providing free capacity for grid services at other times. This dual use opens up additional revenue sources and increases the profitability of the investment in a battery storage.

However, the operational and regulatory requirements for a hybrid use are higher. Some energy service providers recommend a separate approach: EnBW, for example, focuses on battery marketing for storages without self-consumption background – a guideline is ≥ 1 MW capacity and 1 MWh storage, exclusively used for the market [1]. Such a stand-alone storage can be operated optimally at the balancing and spot markets, independent of consumer loads.

Practical Challenges in Hybrid Models

The combination of BTM and FTM applications in one storage presents special requirements for technology, market processes, and organization. The following challenges are particularly relevant:

Energy Management and Control of Hybrid Applications

A powerful energy management system (EMS) is essential to use a battery storage simultaneously for self-consumption and market participation. The EMS must coordinate multiple uses in real-time – for example, sending grid regulation signals to the battery without jeopardizing local supply security or peak-shaving strategy.

Such hybrid use cases demand high standards of hardware and software. In many projects, a networking with a Virtual Power Plant is realized: A remote control unit connects the battery with the aggregator. At the same time, a local EMS keeps an eye on the operational management on-site (state of charge, load profile, etc.). In any case, energy management must ensure that minimum storage levels, power reserves, and reaction times are maintained to avoid violating external commitments (e.g., balancing power provision).

Minimum Bids and Aggregation of Capacities

Many lucrative electricity markets set minimum sizes for bids, which individual C&I battery storages often cannot achieve alone. For primary balancing power (FCR), there is still a typical minimum capacity of 1 MW, while secondary (aFRR) and tertiary balancing power (mFRR) usually require 1–4 MW, depending on the transmission system operator. Therefore, in practice, the aggregation of several decentralized storages via an aggregator is often necessary to bundle marketable services.

In contrast, the entry barriers in day-ahead and intraday trading are significantly lower: Here, the minimum bid size is only 0.1 MWh (100 kWh). Thus, smaller storages can also participate directly – provided they have access to trading infrastructure. Nevertheless, many aggregators or direct marketers bundle small plants to trade larger blocks efficiently and reduce transaction costs.

Balance Circle Management and Risks (Forecast Deviations, Schedules)

Once a battery storage feeds energy into the public grid or draws from it, this must occur within a balance circle. Every market participation thus requires a balance circle responsible party (BKV) – usually an energy supplier or direct marketer – who is responsible for the schedule reporting and quantity balancing towards the transmission system operator.

For FTM storages (those with their own grid connection), this role is usually taken on by the direct marketer. The setup is comparatively straightforward, as the storage is handled as a standalone system with clearly defined feed-in and withdrawal points.

For BTM storages (behind the meter), the situation is more complex: The battery shares the grid connection with other consumers, necessitating exact measurement and separation of self-consumption and market feed-in. This requires establishing a separate sub-balance circle, which not only means additional technical and administrative effort but also requires suitable partners. In practice, the market integration of BTM batteries often fails because no BKV is willing to take on the responsibility for the complex and risky balance circle.

Furthermore, BKVs bear the risk of forecast deviations: For the schedules, feed-in and withdrawal profiles must be reported quarterly precisely. A storage that is both producer and consumer – as in hybrid use – can be difficult to predict. If the actual performance deviates from the reported plan (e.g., due to unplanned self-consumption coverage), balancing energy costs are incurred, which can be financially burdensome.

For these reasons, in many cases, a separate FTM storage is the more pragmatic solution: It can be delineated technically more clearly, integrated more easily from a regulatory perspective, and is more readily accepted by marketers.

Conclusion: Market Integration Yes – But with the Right Setup

For industrial and commercial enterprises, battery storages offer far more today than just peak shaving or self-consumption optimization. Participation in the electricity market – whether through balancing power or trading – unlocks additional revenue potentials and significantly improves profitability. However, the path to this is demanding: market processes, technical requirements, and regulatory guidelines necessitate a well-thought-out concept.

The hybrid use of a storage for BTM and FTM purposes sounds economically attractive, but is often only implementable with significant control effort and additional risks. Above all, balance circle management presents a central hurdle for BTM batteries, as it requires precise measurement and data allocation as well as a balance circle responsible party willing to take on the complex schedule responsibilities – which is often not the case in practice.

Separately managed FTM storages offer clear advantages: They are technically clearly delineated, easier to integrate from a regulatory standpoint, and much simpler to handle from the perspective of direct marketers and aggregators. Even for pre-qualified participation in balancing power markets, FTM storages are often the preferred solution.

Project developers should therefore weigh early on whether a combined model is actually economically and organizationally viable – or whether a dedicated market storage as an FTM facility is not the more sustainable way to efficiently unlock market opportunities. An intelligent EMS, a strong aggregator, and a clear measurement concept are indispensable in both cases.

[1] https://www.enbw.com/energiehandel/batterievermarktung