Optimisation of Battery Energy Storage System in the Estonian Energy Markets
Name
Oliver Püvi
Abstract
Energy markets are distinctive markets with their specific challenges, obligations, and opportunities. The characteristics of electricity as a commodity constrain the way it can be traded. An important factor is that energy that we use to power everything from our refrigerators to medical equipment needs to be in balance. Balance means that the supply and demand of electricity must be roughly equal at any given moment. This balance is crucial for ensuring stable frequency, as the frequency at which the electricity oscillates must remains constant. Deviations from that frequency can lead to power quality issues and disruptions. Therefore, the system balance is an imperative - it must be fulfilled or there can be damage to the grid that distributes electricity. Ensuring balance has historically not been an issue - whenever we needed, we could burn more coal, oil or other fuels to create more energy. However, how we produce energy has come under scrutiny over time, with more and more focus being placed on lowering the impact of our activity on the environment. Greener energy sources, such as wind energy and solar energy, are largely out of our direct control - we cannot make the sun shine or the wind blow. This means that we need assets that can ensure that the grid is always in balance. One option that can alleviate this issue, is a Battery Energy Storage System (BESS). A BESS is able to charge and discharge large amounts of energy. It can help us balance the market by shifting the supply and consumption from one point of time to another. As the renewable energy already holds a significant amount of the Estonian energy market, then it is necessary to analyse whether there already is an economic incentive for building such a system. That is, whether the current market allows for the owner of BESS to make a profit when using it as a tool for energy arbitrage - for buying energy when prices are low and selling when prices are high. For our analysis we will be looking at the day-ahead (DA) and manual frequency restoration reserve (mFRR) markets, which are currently available in Estonia and whether a BESS can be profitable on these markets. We will treat this question as an optimisation task, whereby we have to decide when to buy and when to sell energy on the market. We will demonstrate that given our assumptions, operating a BESS is profitable on the Estonian energy markets whereby we will show that most of the profit comes from the mFRR market.
Graduation Thesis language
English
Graduation Thesis type
Master - Data Science
Supervisor(s)
Novin Shahroudi
Defence year
2024