Index Methodology

Revenue Optimization for Battery Energy Storage Systems (BESS)

Our methodology provides a comprehensive approach to estimating revenue opportunities for Battery Energy Storage Systems (BESS). It evaluates how revenue potentials evolve over time and considers the impact of participating in multiple power markets simultaneously. The model is designed to optimize market participation strategies over a defined timeframe, offering actionable insights for investors and operators.

The calculations are based on imperfect hindsight, where randomness is introduced to the perfect hindsight prices by adding a standard deviation of 10%, reflecting actual market conditions during the analyzed period. To further counter the advantages of perfect hindsight, a conservative approach is taken for each market where the BESS participates. Up to 80% of its power rating is allocated to ancillary markets, while the remaining capacity is used for trading in energy markets.

While this analysis offers a preview of our model's capabilities as a demo case, our investment analysis tool supports more detailed modeling, including different bidding strategies and selecting market-participation.

Due to constraints in publicly available data, certain assumptions and simplifications are applied.