Are Batteries Profitable in the Iberian Electricity Market?

What is it about?

This paper studies how battery energy storage systems (BESS) can be optimally operated in the Iberian electricity market when combined with renewable generation (wind and solar). It develops a forecasting model (LSTM) for electricity prices and renewable production, and integrates it with optimisation models for the day-ahead, intraday, and balancing markets. The goal is to maximise profits and reduce imbalance costs. The economic feasibility of different battery technologies is also evaluated for 2018 and 2025.

Featured Image

Photo by Vanya Smythe on Unsplash

Photo by Vanya Smythe on Unsplash

Why is it important?

As renewable energy increases, variability and forecast errors create imbalance costs and market risks. This study shows how batteries, combined with good forecasting and smart bidding strategies, can significantly reduce regulation costs and increase profits. It also assesses whether battery investments are economically viable, showing that lithium-ion batteries are the most promising option under the studied conditions.