Optimized Sizing of a Battery Storage System Considering the Integration Into a Merit Order Pay-As-Cleared Market

Battery energy storage systems support the transition to renewable electricity sources by balancing demand, enhancing reliability, and increasing resilience against disruptions. However, optimizing battery storage sizing to maximize profitability remains a significant challenge. This paper addresses this by presenting a method to optimize battery storage sizing while accounting for its impact on market dynamics and pricing. To achieve this, a simulation model is developed that evaluates the profitability of battery storage systems based on their participation in the German Frequency Containment Reserve market. The simulation incorporates market constraints and monitors how introducing an offer influences profitability. Considering the specific limitations and characteristics of the pay-as-cleared market structure, this approach provides actionable insights for investors and market participants. Ultimately, this paper aims to facilitate the optimized sizing of BESSs, promoting their integration into merit-order markets and supporting the broader adoption of storage technologies in the transition to renewable energy systems.