Insights
Batteries can generate revenue and reduce costs for virtually any building — but the distribution between the different value streams may surprise you.
Many are familiar with how batteries reduce costs through peak shaving (lowering demand peaks to reduce grid tariffs), increased self-consumption of solar power, and spot market arbitrage (charging when prices are low and discharging when prices are high). While these are real and tangible value streams, in today’s energy market they represent only a small share of the total potential.
We typically divide battery revenues into two categories:
Behind-the-meter value: Created through local optimization of the building’s electricity consumption.
Front-of-the-meter value: Created through participation in frequency and flexibility markets operated by grid operators.
Sunday Power has developed its own optimization algorithm to maximize the total value of battery systems. Contrary to what many expect, up to 95% of total battery revenues currently come from front-of-the-meter markets.
Behind-the-meter value streams include:
Although these are meaningful contributors, our calculations show they typically account for less than 5% of total battery value under current market conditions. The reason is simple: frequency and ancillary service markets offer significantly stronger revenue potential today.
That said, Sunday Power’s algorithm dynamically optimizes across value streams and is designed to capture more behind-the-meter value should market conditions shift.
Maintaining grid stability requires continuous balance between electricity production and consumption. As the share of non-dispatchable renewable energy sources such as solar and wind increases — alongside rising high-power demand such as EV fast charging — maintaining this balance becomes more challenging.
Battery systems are ideally suited to support grid stability. They are fully controllable and can respond rapidly and precisely by charging or discharging as needed. This makes them highly valuable to national, regional, and local grid operators, who compensate assets through frequency and flexibility markets.
In Norway, frequency markets are operated by Statnett and include:
In addition, batteries can participate in local flexibility markets, where distribution system operators (such as Elvia, Tensio, and Glitre) procure available flexibility.
Based on historical performance and projections from THEMA Consulting, Sunday Power estimates that up to 95% of total battery system value currently originates from front-of-the-meter markets. This often comes as a surprise to building owners, who tend to assume that behind-the-meter savings drive most of the economics.
Grid tariffs are the fees paid for transporting electricity to and from the building. They cover the cost of building, operating, and maintaining the power grid.
Because a battery both imports and exports electricity, it will affect grid tariff costs. Sunday Power estimates that total grid tariffs may increase somewhat due to additional energy flows. However, the incremental revenues from ancillary and flexibility services more than offset this increase, resulting in a positive net economic impact.
