Profit benchmarking and degradation analysis for revenue stacking of batteries in Sweden’s day-ahead electricity and frequency containment reserve markets

Nima Mirzaei Alavijeh, Rahmat Khezri, Mohammadreza Mazidi, David Steen and Anh Tuan Le

Applied Energy, 2025, vol. 381, issue C, No S0306261924025352

Abstract: This paper presents a novel mixed-integer linear programming (MILP) model for revenue stacking of battery energy storage systems (BESSs) in Sweden’s day-ahead (DA) electricity and frequency containment reserve (FCR) markets. The model includes a detailed calendar and cycle battery degradation and market technical requirements modeling that aims to maximize the battery owner’s potential profit from participating in the DA and three FCR markets, FCR in normal operation (FCR-N), and FCR in disturbances (FCR-D) for up- and down-regulations. For presenting comprehensive results, successive daily optimizations are conducted for year 2022 using one-minute resolution real data. Five utilization modes are simulated including participation in no FCR market (only DA), only DA and FCR-N, only DA and FCR-D up-regulation, only DA and FCR-D down-regulation, and DA and all FCR markets. The maximum potential profit from revenue stacking in the DA and multi-FCR markets could have been k€ 708 for a 1MW-1MWh BESS, which is 22 times the profit in no FCR participation case. The annual degradation resulting from multi-FCR market participation was 1.7% of loss in battery capacity. Considering degradation in the optimization problem reduced the aging by 29% without a significant effect on profit. The proposed model can serve as a benchmark for evaluating the profitability and sustainability of battery operation strategies and algorithms.

Keywords: Ancillary service; Battery energy storage system; Battery degradation; Frequency containment reserve; Technical market requirements; Revenue stacking (search for similar items in EconPapers)
Date: 2025
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DOI: 10.1016/j.apenergy.2024.125151

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