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Daily Episodic and Continuous Arbitrage Trading With Electric Batteries

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  • Shujin Hou
  • Derek Bunn

Abstract

The business models for the operation of battery storage systems often depend substantially upon the revenues from arbitrage in the daily electricity wholesale market. Other revenue streams can be attractive, but even with them, wholesale market arbitrage is often used as the benchmark. There can be various trading policies for wholesale market arbitrage and this paper provides a comparison of three main variations. These are: day-ahead spread trading, day-ahead trading with look-ahead and intra-day continuously trading with look-ahead. The example is from the GB electricity market in which wind and solar generation as well as demand forecasts are used to forecast electricity prices. The results of the back-testing indicate the comparative attractiveness of day-ahead spread trading in terms of risk and return performance. JEL Classification: Q28

Suggested Citation

  • Shujin Hou & Derek Bunn, 2024. "Daily Episodic and Continuous Arbitrage Trading With Electric Batteries," The Energy Journal, , vol. 45(4), pages 179-194, July.
    • Handle: RePEc:sae:enejou:v:45:y:2024:i:4:p:179-194
    DOI: 10.1177/01956574241281143
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    References listed on IDEAS

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    1. Jürgen Marchgraber & Christian Alács & Yi Guo & Wolfgang Gawlik & Adolfo Anta & Alexander Stimmer & Martin Lenz & Manuel Froschauer & Michaela Leonhardt, 2020. "Comparison of Control Strategies to Realize Synthetic Inertia in Converters," Energies, MDPI, vol. 13(13), pages 1-21, July.
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    JEL classification:

    • Q28 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Government Policy

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