The economics of battery energy storage systems (BESS) in Europe have improved following changes to the European Union’s power pricing and could also result in higher profits for battery storage asset operators.
New research from Rystad Energy, an independent research and energy intelligence company, highlights how changes to pricing could lead to BESS profits to rise more than 15 per cent and even beyond 20 per cent.
Under the revised system, which was implemented at the end of September, electricity prices are set every 15 minutes instead of hourly, giving BESS operators more frequent opportunities to buy power when it is cheap and sell it when prices spike.
Rystad Energy found that since the new system was implemented, arbitrage potential has increased by an average of 14 per cent across European power markets.
Some countries – such as Austria and Slovakia – have seen gains exceeding 20 per cent, while others, including Portugal, Norway and Sweden, have experienced only minor improvements.
Sepehr Soltani, senior analyst for Energy Storage at Rystad Energy said: “In countries with less flexibility in power generation and consumption, high share of intermittent renewables can cause large price swings.
“Rapid changes in wind or solar generation mean electricity prices can shift noticeably even within a single hour. Shorter 15-minute trading intervals capture these quick shifts, creating more opportunities for flexible assets.
“In contrast, in places with a flexible electricity supply, such as Norway with hydropower and Portugal with hydropower and gas, prices are more stable over an hour.
“As a result, the difference between profits from 15-minute and hourly trading is much smaller.”
Rystad Energy’s analysis compared the potential profits from one-hour energy arbitrage in European power markets under two scenarios.
In a 15-minute markets scenario, completing a full arbitrage cycle requires four charging and four discharging steps, while in a 60-minute market the same cycle needs only one charge and one discharge.
The results indicate that shorter trading intervals could increase revenue opportunities for European storage operators.
However, Rystad Energy warned that in today’s unusually high arbitrage margins, about +$150 per MWh – are unlikely to be sustained over the next 10–20 years.
A more realistic long-term average is around $60 per MWh, corresponding to an internal rate of return (IRR) of approximately 6 per cent from pure energy arbitrage.
Soltani noted that the biggest challenge to earning money through arbitrage is the unpredictability of prices.
He highlighted the Australian market, where it switched from 30-minute to 5-minute markets in 2021.
For example, in Australia’s New South Wales, the shift has delivered roughly 20 per cent higher annual arbitrage revenues, while in Victoria, it has generated about 15 per cent higher revenues for one-hour arbitrage over the past four years.