Home battery storage systems: what's the best way to use them?

At Zonnefabriek we've been selling them for a number of years already, but until now the home battery systems weren't a hugely sought-after product. The Dutch net metering system turned the public grid into a kind of infinitely large battery, into which you could store all the 'excess' electricity you generated. After sunset, you got the power you needed from the same grid without having to pay a cent extra. With such a system in place, it was difficult for most customers to justify the investment in home batteries.

But now the situation is completely different. Firstly, all energy suppliers have introduced feed-in costs for people with solar panels. Because of these feed-in costs, what you pay for each kWh of electricity consumed from the grid is now on average about 12 cents more expensive than what you get in return for the electricity fed back into the grid. This makes it more interesting to store and use as much of your own electricity as possible.

Anyone who wants to avoid these feed-in costs can opt for a dynamic energy contact. With such a contract you get charged based on the hourly rates for electricity. At times when everyone feeds solar power into the grid at the same time, those rates are low. At times when everyone uses a lot of energy, they are high. That's why it is also worthwhile for people with a dynamic energy contract to temporarily store electricity and use it later.

Smart market trading with dynamic rates

However, such a dynamic contract offers a much more interesting option. Until now, most battery systems were set up in such a way that they could only deliver their power within the home, and could not supply it back from the battery to the grid. Nowadays they can, and thanks to that you can, so to speak, trade on the market: you charge the batteries with electricity from the sun or from the grid when rates are low, and feed it back into the grid a few hours later when electricity is expensive. For example: you have a 10 kWh battery that you charge at an electricity rate of 16 cents per kWh, and you empty the battery a little later when the price has risen to 30 cents: doing this you quickly make 14 cents x 10 kWh = € 1,40 (without taking into account battery losses). By doing this daily and sometimes even several times a day, you can easily earn hundreds of euros per year. Strictly speaking, you don't even need solar panels on the roof for this!

Even smarter: using batteries on the 'imbalance market'

And there is an even more lucrative way to use your batteries: the imbalance market. On this virtual marketplace, energy companies trade in battery capacity, among other things. They do this to keep the amount of money they have to pay to the transmission grid operator TenneT as low as possible. It's TenneT's job to ensure that demand for electricity and supply remain in balance on the power grid. They do this by asking all parties that trade in electricity to submit their plans for supplying and purchasing electricity each day for the following day. This estimate serves as a basis for drawing up the total energy flow planning for that day.

However, reality always deviates a little from the prior estimates. There may be more demand for electricity in one place than expected, while in other places more electricity may be generated than anticipated. If that happens, TenneT will have to bring things back into balance. They do this, for example, by asking a power plant to quickly ramp up power production or, conversely, to quickly power down, or by asking large industrial power consumers to temporarily put their power-hungry activities on the back burner.

Power plants and companies that help TenneT in this way naturally want to be compensated for this, because it costs money. The parties that submitted an estimate to TenneT (the so-called 'Balance Responsible Parties') must pay for this. The more their prediction was off the mark, the more they have to pay, as a kind of a fine.

However, those Balance Responsible Parties also have an option to reduce their fines: battery storage. As soon as the actual consumption or input of power threatens to deviate too far from the prediction, they can charge or discharge batteries to smooth out those deviations. If they succeed, they can save a lot of money. That is why the use of batteries is worth money to them, and they will be happy to pay quite a bit for it.

People with home batteries can give permission to Balance Responsible Persons to temporarily use their systems for that 'imbalance' market. They can make quite a bit of money this way! Even for relatively small systems, earnings can quickly exceed €80 per month.

How do you go about trading on these markets?

As you can see, trading on the spot market for electricity and on the imbalance market can help you gain interesting benefits from your home batteries. But how do you approach something like this, and how do you choose the best strategy for using the batteries?

Fortunately, you don't have to do anything yourself: there are smart software systems that monitor prices on the spot and imbalance market and control the batteries for you without you having to worry about it. Zonnefabriek is working on a pilot project in which we have installed batteries at a number of customer sites that are controlled by a smart algorithm. That algorithm determines whether the battery is used for one purpose or another, depending on which one offers the most financial value at that moment. The owner of the battery can track everything on an app and see exactly how much money they made on the system. 

The pilot in 3 phases

Phase 1

Recruiting customers for the pilot

Phase 2

Testing the algorithm

Phase 3

Home batteries with the algorithm go live

In the coming weeks and months we will evaluate whether this process is working as expected. If the results are positive, we can then roll it out to all our customers. We're pretty enthusiastic about it because we believe that home batteries have a bright future ahead of them. As soon as we are certain that the system is stable and financially worthwhile, we will roll it out for more customers. So keep an eye on the newsletter, because by the end of summer we'll be able to tell you more!