Together with enspired GmbH, ISEA is developing an index for the German battery market that is intended to transparently map the revenue potential for large-scale storage systems with regard to grid services. The index is currently under development and will be finished in the coming months (Date: 04.2025).
The index was developed by Jonas Brucksch and Jonas van Ouwerkerk. The index takes into account the spot markets (day-ahead auction, intraday auction, intraday continuous trading) as well as the balancing markets (FCR, aFRR). The index is intended to help increase market transparency and provide a basis for investors, project developers and traders to better evaluate potential revenues. The index is intended to create comparability, but not to reflect the actual maximum achievable proceeds. Rather, the index should be designed so simply that it is comprehensible and reproducable.
Revenue potential for Grid-scale batteries
The revenue potential for large-scale storage is diverse today. Below, we show revenues for individual markets and a cross-market approach in which the battery is active in several markets simultaneously. The desired battery configuration can be selected using the drop-down menus. Revenue is calculated transparently and can be verified using our Git repository for one day. More information on our methodology and the code can be found in our documentation.
Abbreviations:
DA: Day-ahead market
IDA1: Intraday auction (calculation with averaged indices one hour prior to delivery)
ID1: Intraday continuous trading (calculation with averaged index one hour before delivery)
IDC: Intraday continous trading (Calculated using the Rolling-Intrinsic method based on transaction data from EPEX Spot)
FCR: Primary control reserve (Frequency Containment Reserve)
aFRR: Secondary control reserve (Automatic Frequency Restoration Reserve)
FCR+aFRR+IDC: In this marketing, the battery is active on several markets simultaneously (Cross-Market)
The next plot shows how revenues are composed in the current cross-market trading approach (see more in the methodology).
Interactive graphic: Click on the legend. Change the values in the dropdown menus to reset the zoom.
Link to more data: Grafana Dashboards
Methodology
The index we developed quantifies revenue potential for large-scale battery storage in Germany. Our methodology has the following characteristics:
- Transparency: Thanks to our open-source code, every user can understand and validate the calculation. This allows everyone to decide for themselves how suitable the calculation basis is for their own asset.
- Complexity: We avoid complex methodology in our calculations to ensure broad acceptance. This means that the index moves further away from industry methodologies, but remains understandable and comprehensible for everyone. We limit ourselves to selected system configurations and market assumptions. These must be taken into account when comparing the index values with actual revenues.
- Reproducibility: We provide sample data that can be used to recalculate a sample day. By using your own data in the same format, the methodology can also be extended to other days.
More information can be found in our documentation. We have also stored the code for calculating the index in our Git repository.
Assumptions for the battery system:
- Round-trip efficiency: 90.25%
- Capacity: 2 MWh (2h) / 1 MWh (1h)
- Power: 1 MW
- Cycles per day: 1 or 2
Assumptions for the markets:
Day-ahead/intraday trading: the power limit (Pmax) and state-of-charge limits (0-100%) of the battery must not be exceeded.
IDC: These revenues provide a more detailed picture of the actual revenues from today’s intraday trading on the electricity exchange, because they reflect not only physical trading but also purely financial trading. To do this, we use the rolling intrinsic method, which buys and sells products on the market on a rolling basis using a linear optimization model. The data used here is not a simplified index (such as ID1), but the transaction data from EPEX Spot.
Frequency Containment Reserve (FCR): maximum marketable capacity is reduced by 20% according to the pre-qualification (PQ) conditions.
Automatic Frequency Restoration Reserve (aFRR): Symmetrical marketing is assumed for the positive and negative power market (50% state of charge). It is also assumed that the marketable power is available for one hour. Therefore, 0.5 MW is marketed in both directions in the 2-hour system and 0.25 MW in the 1-hour system. The market entry barrier of 1 MW is disregarded. In the aFRR Energy Market, we bid based on IDA1 prices in all 1/4h auctions. For a positive call, we place ourselves in the merit order with a 50% premium, and for a negative call, we place ourselves with a 50% discount on the intraday auction prices.
Cross-Market: In this approach, the battery is divided virtually. First, a decision is made for the 4-hour slices of the day as to whether it is more attractive to participate in the FCR or aFRR capacity market. Then, depending on the selected capacity market, the remaining power and energy of the storage facility is divided evenly between the aFRR Energy and IDC markets. The revenues from these markets are calculated in the same way as the revenues from the individual markets.