Battery co-location is the practice of installing a battery storage asset alongside another power generation or consumption facility to enable the efficient integration of renewable energy sources. Most commonly, batteries are co-located with wind or PV (photovoltaic) generators, whose excess energy they store to release on demand. Co-located use cases are complex and highly particular in their design, operation, and optimization.
enspired develops Europe’s fastest AI-based power trading platform, through which customers have 24/7 access to an integrated dashboard to track the commercial performance of their assets. The demo snapshots below show the optimization process and available revenue streams in real market conditions on a 2023 sample trading day for a 3 MW/10 MWh battery co-located with solar that is subject to technical restrictions.
Top: renewable forecasts (dotted line) and actual curves (solid line) for solar (yellow) and wind (blue)
Bottom: load forecasts (dotted blue) and actual load curve (solid blue) plus residual load forecast (dotted pink) and actual curve (solid pink)
SoC throughout the day & trading activities
Market price information
Let us look at how batteries are typically optimized. This co-located battery is under the innovation grant, which means restrictions apply. On the sample trading day, there is a standard-pattern price curve with typical morning and evening peaks. In between those, you can see the spreads. Optimizing a battery means charging it when prices are low and discharging it when they are high. In the intraday continuous graph, the faint line depicts the PV curve. This battery has technical restrictions, meaning we can charge only from the PV. In continuous intraday, we sell and buy positions to reoptimize our profile based on live market developments and updated PV forecasts. If you want to know more about intraday reoptimization, check here.
On days with limited sunshine, making money with a co-located battery that has charging restrictions is obviously more challenging. This is where market foresight really starts to matter. If you expect higher prices in the morning of the following day than in the evening of the current day, it is smart to leave your current day with a high SoC so you can leverage the morning peak. It should be noted that a battery that can be charged from the grid will always perform better commercially than a battery that is restricted to PV charging. From a commercial trading perspective, co-location is interesting primarily for separate asset marketing and grid-scale use cases (5 MW and above). The economic viability must be evaluated on a case-by-case basis.
If you are interested in leveraging available power markets for your co-located asset, it is important to consult with an optimizer as early as possible to discuss the intricacies of the use case and restrictions that need to be considered in the revenue design. Furthermore, it ensures a unified flow of communication between all stakeholders, including developers, investors, and RTM (route- to-market) providers/optimizers. For asset owners, this is also beneficial because it allows them to assess revenue potential early on, which helps with the planning of subsequent project phases, such as financing.
Beyond the commercial optimization, co-located batteries also bring unique challenges to every other project stage, from the setup and installation to the daily operation and maintenance. The high cost, complex technical integration, and associated regulatory hurdles are factors that deserve recognition from relevant authorities so that the implementation of co-located use cases can be simplified in the future. Nevertheless, co-location remains a promising approach to solving the flexibility issues we will inevitably encounter as renewable penetration progresses and, therefore, merits further exploration.
Interested in all project phases of battery co-location?
Our white paper includes information from enspired, WET, BayWa r.e., Fluence, and CCE.