Implementing the energy transition successfully and economically requires not only the expansion of renewable energies, but also the use of battery storage systems and an intelligent optimization strategy. Co-location-Battery storage systems, i.e. battery storage systems in combination with renewable generation systems, offer enormous potential here. They make it possible to integrate battery storage systems in a grid-friendly manner and secure the value of PV systems in times of negative prices. However, not all co-locations are the same: the different technical concepts, regulatory framework conditions and marketing strategies must be considered carefully.
Figure 1 | Types of battery storage: stand-alone and co-location.
1. stand-alone battery storage: maximum flexibility in marketing
A stand-alone battery storage system is connected separately to the electricity grid, without direct coupling to a PV generation system (see diagram 1). This structure enables two central marketing options: Grey electricity marketing purchase/sale on the spot market - day-ahead and intraday and/or balancing energy marketing positive and negative balancing power.
The decoupled structure of the stand-alone battery storage system enables maximum flexibility in terms of driving style and participation in the electricity market. This makes it possible to achieve cross-market optimization. The strategy pursued here is to utilize flexibility through parallel trading on the spot market and in the balancing energy market, thereby generating additional revenue.
2. Grey co-location: shared grid connection, separate balancing groups
In the case of gray co-location, the battery storage system and PV system share the same grid connection point (NAP), but are controlled separately for accounting and technical purposes. The PV system can be marketed via EEG direct marketing, a PPA or other direct marketing channels. The battery storage system, on the other hand, is not marketed via direct marketing, but on the spot market (day-ahead, intraday) or via cross-market optimization.
A key feature is that, depending on the yield situation, either the PV electricity or the battery storage electricity is fed into the grid as a priority. This allows revenues to be controlled in a targeted manner and flexibility on the electricity market to be utilized. Another advantage of this structure is that the EEG remuneration creates fixed income streams for the PV system, which supports the financing of such projects.
3. green co-location: "Behind-the-meter" with innovation promotion
With the green co-location, the battery storage system and PV system are directly coupled "behind the meter". There is only one grid connection point and a separate feed-in or feed-out is not possible. The electricity fed into the grid is fully subsidized via the innovation tender.
In this model, marketing is limited to EEG direct marketing and innovation promotion. Flexibility marketing on the spot market is not applicable, as no gray electricity procurement is possible. The battery storage system can remain unused, particularly in low-yield months such as winter, which reduces potential yields. In addition, the provision of balancing energy is severely restricted.
Despite these limitations, green co-location can still be an attractive business model - especially when viewed from the perspective of long-term value creation and market integration. The following simulation illustrates the significant revenue potential that can be unlocked when battery systems are intelligently optimized, even under the structural limitations of the green co-location model.
Deep Dive: Revenue potential of the green co-location
To illustrate the revenue potential, we have simulated the case of green co-location as an example. The following analysis shows what revenues such a system could have generated in 2024 under flexibility marketing by ESFORIN on the wholesale markets (day-ahead and intraday).
The simulation is based on a 4-hour battery in combination with a PV system with a peak output of 20 MW and 1,000 full-load hours per year. Potential subsidies via the innovation tender were not taken into account in the analysis.
Figure 2 | Additional revenue from green co-location compared to stand-alone PV
The results show: The integration of a 4-hour battery alone can more than double the total revenue of the system. Battery storage systems make it possible to shift PV generation into valuable market time windows and thus generate additional revenue. Green co-location projects often pay for themselves after just a few years thanks to this effect.
Given the increasing number of hours with negative prices on the German electricity market, stand-alone PV systems face mounting economic pressure. Combining them with a storage system is an effective way to meet these challenges.
SUMMARY
Different marketing strategies are available depending on the technical implementation and regulatory framework. While stand-alone battery storage systems offer maximum flexibility for cross-market optimization, grey co-location combines fixed yields with flexibility. Green co-location, on the other hand, relies on subsidy logics and prioritizes the EEG remuneration, but offers hardly any scope for the use of flexibility.
