Impact of distribution fees on BESS scheduling and profitability

2026-06-20

AI Summary

This study addresses the unclear impact of grid distribution tariffs on the day-ahead market dispatch strategies and economic returns of battery energy storage systems (BESS). A mixed-integer linear programming model is developed and applied within a rolling optimization framework, leveraging real-world data from the German electricity market to evaluate the operational strategies and profitability of four BESS configurations—standalone, co-located with load, co-located with generation, and integrated source-load coordination—under varying distribution tariff structures. The analysis reveals a non-monotonic relationship between distribution tariffs and BESS revenues: high tariffs suppress arbitrage gains for standalone systems, whereas the source-load coordination configuration significantly enhances value through load shifting and self-consumption. These findings underscore the critical role of tariff design in shaping BESS investment decisions and regulatory policy.

Abstract

Battery energy storage systems (BESS) are expected to play an important role in electricity markets with increasing shares of renewable generation. While existing research has primarily focused on price arbitrage and ancillary services, the role of grid fees in shaping BESS operation and profitability remains insufficiently understood. This article investigates how different levels of distribution fees affect the scheduling and economic viability of BESS in the day-ahead electricity market. The analysis employs a mixed-integer linear programming model of BESS operation combined with electricity price data from the German market. Four system configurations are considered: stand-alone storage and BESS combined with consumption, generation, or both. The value of storage is measured as the difference between system profits with and without BESS. In addition, a rolling-horizon optimization framework is used to evaluate the impact of forecast uncertainty and decision horizon length on operational outcomes. The results show that grid fees significantly influence both BESS profitability and operational strategies. For stand-alone storage, higher transmission charges reduce arbitrage revenues and battery utilization. When BESS is integrated with consumption and generation units, load shifting and self-consumption become the dominant sources of value, leading to a non-monotonic relationship between grid fees and storage profitability. These findings highlight the importance of considering tariff structures when evaluating storage investments and designing regulatory frameworks for electricity markets with increasing flexibility needs.

Problem

• distribution fees
• BESS scheduling
• profitability
• electricity markets
• grid tariffs

Innovation

• distribution fees
• BESS scheduling
• mixed-integer linear programming
• rolling-horizon optimization
• storage profitability