Enhancing Grid Sustainability Through Utility-Scale BESS: Flexibility via Time-Shifting Contracts and Arbitrage

The increasing penetration of renewable energy introduces significant challenges to grid stability and economic performance due to the intermittent and non-dispatchable nature of solar and wind generation. These fluctuations contribute to grid congestion, frequency control issues, and price volatility, reducing revenue predictability for renewable producers. It is then clear that the challenge of energy transition can be addressed by making the introduction of renewable sources into the electricity grid sustainable. Battery Energy Storage Systems (BESSs) have emerged as a flexibility resource providing time-shifting, frequency and voltage support, congestion management, and energy arbitrage. In response, several Transmission System Operators (TSOs), such as Terna in Italy in cooperation with photovoltaic (PV) and wind power producers, have initiated flexibility projects. However, these projects are limited and should be accompanied by liberalization measures that allow BESSs to be economically sustainable only under market conditions. This study evaluates the techno-economic feasibility of utility-scale BESSs either integrated into large PV/wind farms or stand-alone for providing grid flexibility services and profit increase for the producers. Both market conditions and TSO incentives will be considered. A two-step mixed integer linear (MILP) optimization approach is employed: first, an optimization schedules BESS charge and discharge operations based on historical generation and market data; second, the Net Present Value ( NPV ) is maximized to determine optimal system sizing and profit. The model is validated through real case studies and sensitivity analyses including BESS degradation, market volatility, and regulatory factors. The developed model is ultimately applied to compare the study cases, and the analysis shows that, under specific conditions, the arbitrage of a stand-alone BESS can be as profitable as the incentives offered by TSOs.