The market is looking for solutions supporting battery optimization and trading
It is evident that energy transition technologies continue to advance despite certain challenges. This is particularly true for power grid expansions and the development of flexibility markets, where Battery Energy Storage Systems (BESS) play a crucial role, see more here Battery Energy Storage Systems (BESS) as a Key Flexibility Provider – ETT Center.
Recently, I have had several discussions with battery project developers about battery market access and the software solutions that support it. Companies recognize the growing demand for solutions that facilitate battery market participation. But what are the key requirements for such solutions?
Examining the battery value chain, we can identify three main types of solutions: Battery Management Systems (BMS), Energy Management Systems (EMS), and trading & analytics solutions. The BMS is typically provided by battery manufacturers as part of the hardware package. The EMS, often developed by third-party providers, acts as an intermediary, connecting batteries to further applications. Both BMS and EMS are relatively standardized, offered by large industry players.
However, the most complex and uncertain area lies in the third category: trading and analytics solutions. What is the underlying business model?
Batteries generate the highest profits when traded across multiple markets, ranging from different types of reserves to intraday and day-ahead markets. To achieve this, software solutions must support automated bidding and bidirectional communication with these markets, including TSO communication as well as trading platforms like EPEX and Nord Pool.
Battery optimization is another critical challenge, as it must account not only for market prices and volatility but also for battery lifespan and contractual constraints, which often limit the number of charge/discharge cycles. True optimization requires real-time integration with BMS and EMS to provide up-to-date battery status. Additionally, to support algorithmic trading on EPEX and Nord Pool, the solution must be capable of executing automated trading including algo strategies.
Many companies are seeking such solutions to maximize the profitability of their own battery assets as well as to offer trading-as-a-service for other BESS project developers. However, few vendors currently provide the full spectrum of functionalities needed for this business model. This presents a promising opportunity for software companies to innovate and develop solutions tailored to this emerging market. Where there is demand, supply will follow.
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