Marketing the flexibility of neoom battery storage systems - a business model with potential

In addition to the traditional applications of battery storage systems such as self-consumption optimization, peak load shaving, and backup power supply, new business models are emerging for storage operators. Operators of larger battery storage systems in particular can benefit from marketing their flexibility on the electricity market and thereby become a pillar in keeping up grid stability.

Our BLOKK in the heart of the IKEA store near Vienna's Westbahnhof is an excellent example of these new business models. When you find yourself standing in front of the furniture store, you would not suspect that there is a BLOKK battery storage system with a capacity of 1042 kWh hidden inside. With this capacity, it was not only the largest in-house battery storage system in Europe at the time of installation but also well-suited for flexibility marketing and the provision of balancing energy to stabilize the power grid.

Grid frequency and balancing energy

Photovoltaic and wind power are known to be dependent on external factors such as weather and time of day, making their generation volatile. At the same time, the balance between electricity supply and demand must be maintained at all times to uphold the grid frequency of 50 Hertz. Since continuous frequency fluctuations occur, various protection and compensation mechanisms exist in the European energy industry that network operators can use to respond. One of them is balancing energy. It is provided instantly by flexible generation and consumption facilities and can be contracted by transmission system operators through market-based processes. 

Balancing power marketing by TIWAG

One possible source of this much needed balancing energy are battery storage systems just like our BLOKK at the IKEA store in Vienna. With TIWAG - Tiroler Wasserkraft AG, Tyrol's largest energy supply company, we have found a competent partner who brings a wealth of know-how in marketing energy assets. TIWAG successfully utilizes the local storage system at IKEA to provide primary balancing power (PRL/FCR). This is the first type of balancing energy to be activated and immediately responds to deviations in grid frequency.
Since the primary balancing reserve is mainly used to mitigate short-term frequency deviations, the required power must be available within just 30 seconds. In order to guarantee compliance with these requirements, the facilities in use are subject to strict technical specifications, which our hardware and software fully meet.

A future-proof business model

The fact that balancing energy should increasingly be provided by battery storage systems in the future is also the conclusion of a study by the Austrian Institute of Technology (AIT), which investigated how electric storage systems can be used in a grid- and system-friendly manner to facilitate the integration of renewable energies into the energy system. This is more important than ever, given the government's goal to cover 100% of Austria's annual electricity demand with renewable energy by 2030. The capacity of wind power would need to double from roughly 2.8 GW to 6.7 GW and photovoltaic capacity needs to increase fivefold to approximately 13.5 GW.

Figure: The share of renewables among newly installed generation plants worldwide was already 82% in 2021.

Such a high share of volatile renewable energy sources can impose a significant additional burden on distribution and transmission networks. The AIT study assigns an important role to electric storage systems to solve these challenges and suggests using electric energy storage devices like batteries throughout the entire electricity supply chain to provide part of the required balancing energy. This can help to reduce the load on other operating equipment such as power lines and transformers, ensure voltage quality, and reduce transmission losses in the grids. In short, battery storage systems can provide balancing energy much more affordably and cleanly than thermal power plants.

Grid-, market-, and system-friendly storage systems play a key role in realizing the energy transition and decentralizing energy supply. Accordingly, their demand is steadily increasing. Operators of larger battery storage systems can already benefit from this by marketing the flexibility of their storage systems on the electricity market.

Terminology

Primary balancing power / primary reserve (PRL)

Balancing energy is divided into three categories that differ in terms of their deployment speed and duration. Primary balancing power is used for the short-term balancing of grid instabilities and must be fully available within 30 seconds. It is called upon directly by the provider depending on the grid frequency, without prior request from the transmission system operator.

Grid-friendly

Grid-friendly refers to individual or multiple electrical systems such as generators, consumers, or storage systems that contribute to reducing grid costs. By avoiding grid bottlenecks and overloads, the need for grid expansion ultimately decreases.