Modeling the influence of installed battery energy storage systems on the German frequency containment reserve market

This paper uses the basic principal of agent based market simulation to investigate the effect of a diminishing number of conventional thermal power stations and an increasing number of installed BESS on the frequency containment reserve (FCR) market price. As the structure of FCR market participants can have a huge impact on future prices and economic viability of recent investments the conducted analysis takes various sensitivities such as expected lifetime and cost assumptions for BESS into account. Results show the interdependency between an increasing number of BESS and decreasing average prices on the FCR market while the degree of price degression is sensitive to several factors. An extreme scenario with overinvestment in BESS even shows a massive FCR price fall. However, if market participants take the elementary signals into account for their investment decisions the capacity of installed batteries and thus the price decline is limited. The goal of this work is to identify those parameters that have the greatest influence on the investment in BESS and subsequently use these as input for more sophisticated market simulations.