BESS: the potential of hybrid system, Greensolver’ financial analysis
Battery storage is revolutionizing the road to achieve a cleaner energy mix. In Europe, by the horizon of 2030, the objective is to reduce the greenhouse gas emissions by 55% compared to 1990 levels, the target includes 32% of renewables in the energy mix. Given the intermittent nature of renewable sources such as wind and solar, Energy Storage Systems (ESS) and particularly Battery Energy Storage Systems (BESS) is crucial. The increase of investments in BESS highlights how important BESS are in maintaining the stability and reliability of renewable energy.
Indeed, battery storage systems boost power production efficiency by storing excess energy produced during peak period and discharging it when required, which ensures a consistent supply of energy. The development of BESS has paved the way towards hybrid systems, mixing BESS and other renewable technology mainly Photovoltaic project together. Hybrid systems offer significant synergies compared to standalone BESS or solar plants. Revenue stacking is essential in BESS to remain competitive and profitable. In the coming years, projections suggest an increase in secondary reserve and a decrease of primary reserve, couple with a spot arbitrage, which will become a key revenue source for hybrid system in France.
Currently, France’s hybrid market is less mature compared to countries such as the UK or Germany. According to RTE, after 2030, the battery system market will highly depend on the photovoltaic market. In addition, research indicates that the growth of hybrid systems in France will be driven by battery storage. The secondary reserve has opened for battery storage in June 2024 in France, expanding the opportunity growth for the storage market and raising questions about the potential for hybrid system implementation. By 2030, the market size of BESS might equal the sum of primary and secondary reserve, with a maximal size of 1.5 GW.
Hybrid systems can take three forms: co-located AC (non-hybrid), where the land and grid connection are shared, but the technologies operate independently without any interaction; co-located AC (hybrid), where the technologies are integrated to work together; and co-located DC, where both the power generation and transmission are optimized through direct current. Currently, the preferred solution by investors in terms of financing, revenue synergy, technical efficiency, and maturity is co-located AC projects. In the long-term, the goal is to optimize the co-location between BESS and solar-PV through revenue stacking, leveraging arbitrage and managing TURPE. The coming years call for a high increase in investment in BESS and hybrid projects.
Greensolver sees the development of hybrid project as a major opportunity for investment in the coming years, especially with the recent opening of the secondary reserve in France. Greensolver’ financial and technical teams are dedicated to mastering this market and technology. We offer a comprehensive understanding of the stakes involved in hybrid systems through detailed modeling of hybrid projects. Multiple scenarios have been projected with IRR varying quite significantly, as BESS investment results are very sensitive to initial inputs. Our financial experts understand the complexity of co-located assets and provide deep insights into the market, including investment, revenue, OPEX, and financing. Our goal is to maximize the value of your hybrid project. The emerging market of hybrid projects, in France particularly, requires deepen analysis, ensuring both profitability and sustainability of hybrid projects.
Written by Antra Ramboarison, Financial Analyst
