Maximising BESS profitability in Europe through forecasting and real-time optimisation

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The rapid expansion of battery energy storage systems highlights the critical need to assess investments and optimise revenue streams throughout their lifecycle. The structure of a decarbonised power sector, along with the regulatory frameworks that will shape it, differ by region and, in many cases, remain undecided.

With various factors at play, including Europe’s nuclear resurgence, the rising role of hydrogen and the continued growth of renewable energy sources such as wind and solar, energy markets are highly volatile and uncertain. Navigating these complexities requires accurate revenue forecasting to inform sound investment decisions.

As competition in the BESS sector intensifies and market conditions remain unpredictable, the need for robust forecasting and optimisation strategies has never been more urgent. Both elements are essential for bringing projects to market and ensuring they remain profitable in the long term.

Energy market volatility is largely driven by fluctuations in renewable energy generation and changes in demand. Renewable sources like wind and solar are inherently intermittent, leading to periods of high and low generation that affect energy prices.

BESS operators can capitalise on these price fluctuations by charging their assets when prices are low and discharging when prices are high. However, accurately predicting when these price changes will occur is a complex optimisation task that requires detailed forecasting.

Demand shifts also contribute to energy market volatility. Changes in demand, whether due to extreme weather events, shifts in consumption patterns, or seasonal variations, can significantly impact energy prices.

Operators need to anticipate these shifts and adjust their strategies accordingly. For example, BESS systems can store energy during low-demand periods and release it during high-demand periods, maximising profit potential.

The rapid expansion of storage capacity is also reshaping market conditions. In countries with a high share of renewable energy, such as Germany and the UK, large-scale deployment of BESS assets is transforming the market. The influx of additional storage capacity could reduce price volatility by stabilising the grid, which, in turn, may decrease arbitrage opportunities.

This shift may, however, provide opportunities in other areas, such as frequency regulation or ancillary services markets, where BESS assets can earn additional income. This growing competition and changing market conditions pressure operators to continuously refine their strategies.

To assess the revenue potential of a BESS, it is also important to understand the various methods used to evaluate its performance. These methods – bankable forecasts, backtesting, battery indices and portfolio performance – each provide different insights into the asset’s potential earnings, helping investors gauge the financial viability of their BESS and enabling them to secure financing while considering the risks and rewards involved in such an investment.

The most transparent method for assessing revenue potential is portfolio performance, which reflects actual, independently verified financial results from operating BESS assets. Unlike bankable forecasts and backtests, portfolio performance provides real market data that aligns revenue expectations with real-world outcomes. For an investor, this method offers the highest degree of confidence that the BESS will generate expected returns over its lifetime.

The revenue potential of a BESS is maximised when operators strategically participate in multiple markets, each offering different revenue opportunities.

In addition to wholesale energy markets – such as the day-ahead market (DAM), intraday market (IDM) and continuous intraday market (IDC) – where operators can engage in energy arbitrage by charging when prices are low and discharging when prices are high, ancillary services, especially in the frequency containment reserve (FCR) and automated frequency restoration reserve (aFFR) provide additional market opportunities.

By combining participation in these wholesale and ancillary service markets, operators can create a comprehensive strategy to maximise their revenue potential, ensuring that each available market opportunity is fully optimised.

This capability allows for revenue stacking – the strategic use of a single asset to generate multiple revenue streams. For instance, a 10MW/20MWh battery might be marketed on FCR, but since only about 80% of the battery capacity can be prequalified for FCR, 2MW of the total capacity may remain underutilised. These 2MW can be marketed in the wholesale market, providing additional revenue without breaching State of Charge (SoC) management requirements.

A dynamic split between FCR and wholesale markets, based on real-time market conditions, can significantly increase revenue generation and reduce financial vulnerability by diversifying the income sources.

The key optimisation challenge here is determining how much capacity should be committed to each revenue stream at any given time. Committing too much to ancillary services may limit opportunities in wholesale trading, while prioritising arbitrage may reduce availability for high-value grid services. This balancing act requires predictive models that process large volumes of data in real time, integrating information from wholesale electricity markets, ancillary services and grid demand signals.

The ability to process and analyse this data efficiently is critical to guide decision making and ensure that BESS assets are dispatched in the most profitable way while remaining flexible enough to respond to sudden market shifts.

Advanced auto-trading systems are increasingly used to address this complexity. These platforms are designed to manage a broad array of data inputs – including weather forecasts, market signals, battery performance metrics such as degradation and efficiency and grid-related constraints – to support real-time, automated dispatch decisions.

As markets evolve and regulatory frameworks take shape, operators that adopt a transparent, data-driven, and multi-market approach will be best positioned to stay ahead. With the right strategies and systems in place, battery energy storage can deliver stable, long-term value in a future powered by clean, flexible and intelligent energy infrastructure.

Dr Lennard Wilkening is co-founder & CEO of suena energy, a green energy marketer for battery storage and renewables. Lennard holds a PhD in gridoriented use of battery storage systems from the Technical University of Hamburg and has more than nine years of experience in battery storage optimisation and energy trading.