How to Revenue Stack your Battery – New Energy Expert Insights with Marija Petkovic of Energy Synapse

Part I

In this two-part New Energy Expert Insights series, we sat down with Marija Petkovic, founder and Managing Director of Energy Synapse to discuss the challenges and opportunities of incorporating Battery Energy Storage Systems (BESS) in renewable energy projects.

Marija is one of the nation’s leading energy analysts and her advice is often sought by government and major public and private actors in the energy sector. Energy Synapse is an Australian analytics and advisory firm specialising in wholesale electricity markets, renewable energy, energy storage and demand response.

In our previous New Energy Quarterly on “The Rise of Dispatchable Renewables”, we examined how the incorporation of BESS in renewables projects is changing the Australian energy market. While advising clients we see revenue calculation and regulatory barriers complicating BESS developments.

In this Part I, we gain Marija’s insights into the ‘stacking’ of BESS revenues and in Part II, we discuss barriers to BESS deployment.

How does Energy Synapse assist projects that also incorporate battery storage technologies?

Energy Synapse provides revenue modelling and strategic advisory for battery projects ranging from utility-scale projects in the hundreds of megawatts down to innovative distributed and community-scale batteries. We have had the pleasure of working with a range of private clean energy developers as well as state and federal government departments and local councils. Energy Synapse also offers a software platform that makes it easy to evaluate the financial performance of BESS.

Revenue Stack your Battery

A buzzword currently being used in the market is ‘revenue-stacking’ for BESS. How do you approach the revenue stacking of BESS? What are the revenue streams and how do you categorise them?

One of the things that makes batteries so exciting is the range of services they can provide. For front-of-meter BESS projects, this typically includes:

  • Wholesale market services: Energy arbitrage and the eight FCAS markets;
  • Non-market ancillary services;
  • Non-monetised NEM services such as fast frequency response (new markets being created in 2023), virtual inertia, system strength;
  • Network services which can defer the need to upgrade Transmission and distribution infrastructure; and
  • Financial contracts such as those related to firming renewables and virtual cap style contracts.

Wholesale energy arbitrage and FCAS are the easiest to access because the NEM has markets for these services. As a result, these are a core area of focus when modelling revenue streams for batteries.

However, there are a number of valuable grid services such as fast frequency response and virtual inertia for which the NEM does not have a compensation mechanism at present (although that will change for the former with the creation of FFR markets).

Batteries can also potentially act as “virtual transmission” and alleviate the need for network upgrades. Unfortunately, most network companies have been relatively slow in considering non-network solutions.

What is energy arbitrage and what drives the arbitrage revenue model?  

Arbitrage revenue is the difference between the price at which the battery buys energy (i.e. charges) and the price at which it sells energy (i.e. discharges). Arbitrage opportunities are highest when there is a large spread in wholesale energy prices. In contrast, arbitrage opportunities are lowest when the price profile is relatively flat.

Market volatility has traditionally been driven by high demand events that arise due to extreme temperatures. While these extreme weather events are still important, going forward, we will increasingly see market volatility being driven by the availability of wind and solar.

Wind and solar have zero marginal costs, which makes them very good at pushing down the wholesale price at the times that they are generating electricity. In contrast, prices spike when there is low variable renewable energy (VRE) output and the market is controlled by gas and hydro generators. For example, we are already seeing very large intraday price spreads due to solar pushing down the price in the middle of the day and dispatchable generators bidding up the price in the evening.

Furthermore, the coal fleet is becoming less reliable and when these generators trip, we tend to see extreme volatility in the market – especially when these events occur at times of low VRE output. Due to their fast and accurate response, batteries are very well placed to take advantage of any unexpected price spikes under five-minute settlements.

In a previous article, you highlighted how BESS in South Australia were generating income by charging during negative pricing intervals. Do you think this ‘income stream’ is temporary due to the market not being ready for renewables or do you see this continuing?

When there are negative prices, that is the market working exactly as it should. It is sending a signal that there is excess generation in the market and that is a great opportunity for batteries, pumped hydro, and demand response to soak up the excess supply.

There were a record number of negative price intervals in South Australia during September and October 2021. As a result, batteries were paid to charge throughout those two months. This was certainly a very interesting development in the market! However, despite being paid to charge, the total arbitrage revenue stream (sum of charging and discharging revenue) was relatively modest during these months.

Arbitrage opportunities tend to be driven more by high price events rather than low price events. This is because market pricing in the NEM can go as high as $15k/MWh whereas the floor is only $1k/MWh.

In Part II, we will gain Marija’s insights on barriers to BESS.deployment.


The Hamilton Locke team advises across the energy project life cycle – from project development, grid connection, financing, and construction, including the buying and selling of development and operating projects. For more information, please contact Matt Baumgurtel.

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