BESS Participation in the Italian Balancing Service: Profitability Evaluation via an Optimal Bidding Approach

Battery Energy Storage Systems (BESS), as stand-alone devices or in support of conventional or renewable power plants, represent viable new providers of ancillary services within the Ancillary Service Market (ASM). Their possible participation in the real-time stage of the Italian ASM, i.e. in the Balancing Market (BM), is here simulated with reference to balancing service supply. More precisely, starting from bid prices pre-determined on the basis of historical BM accepted bid price levels, a global optimization procedure is adopted to compute the energy exchanges which should be bid on the BM by a stand-alone BESS along a year to maximize the annual profit from the service. The computation is carried out by including or not, in the cost function, a penalty coefficient related to battery cycling aging. Bids are simulated either on an hourly basis, as required by the current BM rules, or on a quarter-of-an-hourly basis, according to the foreseen implementation of the new European market rules. The bid acceptance/rejection status is pre-determined by comparing their price with a reference price (for an upward or downward bid respectively, the maximum upward or minimum downward historical accepted price in each quarter of an hour). Service profitability is then evaluated in terms of the related simplified PayBack Period (PBP) defined as the ratio between the BESS investment cost and the maximal annual profit. The PBP is also compared to the battery cycling life estimated from the state of charge profile derived from the optimal energy exchanges.