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Optimizing Multi-Market Participation of Battery and Electrolyser Systems Based on Field Performance
Chunyang Zhao, Stoyan Trenchev, Shi You, Chresten Træholt
TL;DR
Real-hardware limitations are often omitted when evaluating battery and electrolyser participation across electricity and ancillary-service markets. This paper combines experimental characterization with optimization of multi-market operation, finding that reserve markets dominate value while hydrogen production is only marginally profitable.
Problem
Most existing studies neglect real-hardware constraints such as efficiency, ramp dynamics, and setpoint-tracking accuracy when assessing market participation.
Method
The study experimentally characterizes a BESS and modular electrolyser, then embeds measured performance in a data-driven framework optimizing energy and reserve bids across Danish markets.
Results
Reserve markets dominate value, while hydrogen production is only marginally profitable; BESS operation yields 622,437 DKK over three years with an 11% SOH decrease.
Takeaways & Limitations
Realistic modeling of physical performance and multi-market participation is crucial for assessing the economic potential of BESS and electrolyser assets.
Abstract
from arXiv · showhide
The increasing share of renewable energy in power systems creates a need for fast-response and flexible resources to maintain system stability. With the expansion of electricity markets and ancillary service products, opportunities arise to stack revenues across multiple services. Long-term Power-to-X (PTX) electrolysers and short-term battery energy storage systems (BESS) are prevalent flexible resources, yet most studies neglect real hardware behavior, such as ramp limits, efficiency, and setpoint-tracking accuracy. This work presents experimental and modeling results for a 55 kW/79 kWh BESS and an electrolyser comprising three 2.4 kW units. Key characteristics are identified through measurements and embedded into a price-driven optimization framework for participation in the Danish electricity and ancillary service markets, utilizing real market data from 2022 to 2025. The optimized daily profits for multi-market participation are 1,749.27 DKK and 289.46 DKK for the BESS and electrolyser, respectively. With the demonstrated business cases for BESS and PTX systems, this work highlights the importance of incorporating experimental performance when evaluating participation across multiple markets and years.
I. INTRODUCTION
The paper examines multi-market participation by distributed energy resources in expanding renewable-energy systems, emphasizing that real hardware constraints affect market eligibility and profitability. It contributes experimental characterization and data-driven optimization for a BESS and an AEM electrolyzer across Danish electricity and ancillary-service markets.
- Rapid electrification and variable renewable deployment increase the need for distributed resources such as BESS, heat pumps, and electrolysers to balance supply and demand.
- New Nordic products including FFR, FCRD, and FCRN reward fast, bidirectional flexibility and enable small responsive assets to participate across markets.Eligibility depends on activation time, duration, and accuracy requirements.
- Existing studies often neglect real hardware limitations, including constrained voltage windows, temperature-dependent efficiency, tracking inaccuracy, and nonlinear startup or ramp dynamics.Battery SOC and SOE behavior can also influence market participation and profitability.
- The paper experimentally characterizes and models a modular Xolta BESS rack and a modular AEM electrolyzer installed at the Technical University of Denmark.The stated contributions include quantifying operational constraints relevant to market participation.
- A data-driven framework optimizes energy and reserve bids across Danish day-ahead and ancillary-service markets using historical data and real-world operating constraints.The work evaluates revenue potential through optimized dispatch across multiple markets.
II. EXPERIMENTS AND ASSET CHARACTERIZATION
Experiments characterized a 55 kW/79 kWh modular BESS and a three-module 2.4 kW electrolyzer, identifying operational limits, efficiencies, tracking accuracy, degradation, and response dynamics for dispatch modeling.
- BESS characterization: The BESS can follow setpoints only within SOC 12 %–95 %, providing approximately 52 kWh of market-usable energy at a 30 kW limit.The usable energy is reduced from the 55 kW converter specification by connection limitation.
- BESS characterization: 98% round-trip efficiency was measured at 15 kW, decreasing to about 90% at the 30 kW full-power level.These measurements correspond to 50% and full power, respectively.
- BESS characterization: 3 % charging and 7.6 % discharging setpoint-tracking errors were measured from external measurements.The reported tracking accuracy differs between charging and discharging.
- BESS characterization: Useful BESS energy capacity declined from 72 kWh in 2020 to 65 kWh in 2025, corresponding to 90 % state of health.The study attributes prior degradation mainly to calendar aging and projects cycling usage to dominate with more extensive operation.
- Electrolyzer characterization: The electrolyzer operates at 60–100 % nominal power, requires roughly 30 minutes of 0.2 kW preheating without hydrogen production, and ramps up in 21 s and down in 1.6 s.Below 60 %, hydrogen–oxygen separation deteriorates and the units shut down; these constraints are represented as binary transitions among idle, standby, and run modes.
III. MULTI-MARKET PATICIPATION AND MODELING
The section formulates BESS and electrolyzer scheduling as mixed-integer linear programs for multi-market revenue optimization. The models incorporate market prices, reserve participation, hardware constraints, degradation or operating costs, and experimentally fitted performance characteristics.
- BESS optimization: The BESS MILP maximizes daily revenue from energy arbitrage and reserve-capacity provision using charging, discharging, reserve bids, and state-of-energy decisions.The formulation includes charging/discharging tariffs, reserve bids, marginal degradation cost, and equivalent full-cycle energy.
- BESS optimization: BESS operation enforces mutually exclusive charging and discharging, 12–95 % state-of-energy bounds, power limits, and a daily throughput constraint.Round-trip efficiency is included in the state-of-energy calculation, while throughput limits mitigate excessive degradation and unrealistic cycling.
- Electrolyzer optimization: The electrolyzer MILP models idle, preheat, and run transitions while maximizing hydrogen revenue net of electricity costs, start-stop penalties, and reserve-capacity income.Available reserve-capacity markets are FFR, FCRDU, and FCRN.
- Implementation and constraints: Both models are implemented in Python and solved with Gurobi using Energinet 2022–2025 price data and synthesized activation factors from frequency recordings.Hydrogen production uses a fitted quadratic flow model valid in the running state, and preheating follows a measured exponential law with k = 0.019 min−1.
- Implementation and constraints: Electrolyzer operation requires approximately 30 min of warm-up before hydrogen production and constrains reserve bids by headroom, response direction, state exclusivity, and minimum up/down durations.The optimization uses a 24-hour horizon for BESS and a 96 × 15-minute horizon for the electrolyzer.
IV. RESULTS
Results show that BESS revenue gains saturate at moderate daily cycling, while higher cycling accelerates degradation. Electrolyser profitability depends strongly on ancillary-service participation, operating schedules, and changing market conditions across 2022–2025.
- BESS results: Approximately 6.2 × 10^5 DKK accumulates at a nominal BESS limit of 1 cycle per day over three years.Raising the limit to 3–5 cycles per day improves revenue by less than 6 % but increases SOH loss from 11 % to nearly 20 %.
- BESS results: Less than 6 % revenue improvement results from increasing the BESS throughput limit from 1 to 3–5 cycles per day.The same increase accelerates degradation from 11 % to nearly 20 % SOH loss over the evaluated period.
- Electrolyser results: Roughly 300 % higher total daily profit results when FFR and FCRN ancillary services are included, enabled by the plant’s fast downramping capability.The optimizer schedules preheating during low-price hours, full-load operation during low or negative spot prices, and curtailment when reserve prices peak.
- Multi-year results: Market peaks shift across years, with FFR peaking in 2022, FCRD in 2023, and FCRN in 2024, while BESS daily revenue generally declines.The multi-year simulations evaluate each 24-hour period between 2022 and 2025; pure hydrogen production often leads to losses because prices barely cover operating costs.
V. DISCUSSION
The discussion reports declining monthly BESS revenues since mid-2023, with often-negative spot-market results and reserved capacity limiting battery energy flow during multi-market operation.
- BESS case study: Profits have been decreasing since mid-2023, while spot-market results are often negative because the battery charges for reserve provision.BESS multi-market operation reserves most capacity, effectively limiting energy flow and usually preventing it from reaching its daily cycling limit.
VI. CONCLUSION
The study integrates experimental hardware characterization with optimization to evaluate multi-market operation of a BESS and modular electrolyser. Results show that reserve-market participation drives value, while hydrogen production is only marginally profitable.
- VI. CONCLUSION: The framework evaluates a 55 kW/79 kWh BESS and modular 3 ×2.4 kW electrolyzer using embedded hardware performance measurements.The model includes a 52 kWh usable BESS energy window, 90–98% efficiency, and electrolyzer ramp times of 21 s up and 1.9 s down.
- VI. CONCLUSION: Reserve markets dominate asset value, while hydrogen production is only marginally profitable.Participation in FFR, FCRD, and FCRN significantly increases daily profit.
- VI. CONCLUSION: Realistic physical-performance modeling and multi-market participation are crucial for assessing the economic potential of these assets.The conclusion links economic assessment to both measured hardware behavior and participation across multiple markets.