{"id":20093,"date":"2026-03-25T09:39:39","date_gmt":"2026-03-25T08:39:39","guid":{"rendered":"https:\/\/www.esforin.com\/?p=20093"},"modified":"2026-06-09T11:07:08","modified_gmt":"2026-06-09T09:07:08","slug":"dynamic-fcas-and-battery-optimization","status":"publish","type":"post","link":"https:\/\/www.esforin.com\/en\/dynamic-fcas-and-battery-optimization\/","title":{"rendered":"Dynamic FCAs and battery optimization"},"content":{"rendered":"
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Bridging the gap between theory (FCAs) and practice (BESS optimization)<\/h2>\t\t\t\t<\/div>\n\t\t\t\t
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The energy transition is accelerating and this is nowhere more visible than in the rapid de-ployment of battery energy storage systems (BESS). To speed up the rollout, grid operators across Europe increasingly rely on Flexible Connection Agreements (FCAs). These agree-ments promise faster (or at all) grid connections in exchange for allowing the DSO or TSO to curtail or constrain the asset under certain conditions.<\/p>

On paper, FCAs are efficient, pragmatic and innovation\u2011friendly. In practice, especially when dynamic and non\u2011deterministic, they introduce a level of operational uncertainty that can deep-ly challenge BESS optimisation.<\/p>

At the BATCON\u20111 conference in Munich in March 2026, our COO Christoph Gardlo unpacked what many in the industry are beginning to realise: \u201cDynamic FCAs are extremely hard to model and therefore practically not usable for tolling in real\u2011world BESS optimisation.\u201d This article sums up why.<\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t

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Why FCAs exist and why \u201cdynamic\u201d matters<\/h2>\t\t\t\t<\/div>\n\t\t\t\t
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FCAs were designed to ease grid bottlenecks by giving operators the flexibility to curtail assets when grid stability requires it. Instead of waiting years for reinforcement, developers can con-nect earlier, but with constraints.<\/p>

Not all FCAs are equal: Static FCAs define clear, predictable limitations which translates into \u201cwe can handle that\u201d. They can be risk-assessed, modelled and priced and therefore the as-sets are still available for tolling and therefore for significant leverage by debt financing. Dy-namic FCAs, however, change in real time based on grid status, often communicated at short notice, or not communicated at all. For the BESS optimisation, this difference is enormous.<\/p>

A BESS that is supposed to operate 24\/7 in wholesale or ancillary markets must know what it can do. Every deviation or uncertainty from the expected operating window directly hits the return profile. Unlike wind or PV, a battery\u2019s value is almost entirely dependent on strategic control decisions.<\/p>

When those decisions are constrained unpredictably, optimisation quickly becomes extremely complex and sometimes impossible which leads to either massive discounts on potential tolling deals or a non-tollable battery asset.<\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t\t<\/div>\n\t\t\t\t

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The impact of FCAs on BESS optimisation<\/h2>\t\t\t\t<\/div>\n\t\t\t\t
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There are some impacts that battery energy storage investors and owners should bear in mind when deciding for a FCA:<\/p>

  • Every FCA affects the optimization and there are no exceptions:<\/em><\/strong> Even seemingly minor limitations (like ramp-rate adjustments or temporary curtailments) re-duce optionality. Batteries monetise optionality. A constraint limits value.<\/li><\/ul>

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    • Communication timing drives the revenue impact:<\/em><\/strong> The timing of curtailment signals is where the \u201cdynamic\u201d element of FCAs becomes most chal-lenging. If the grid operator issues a restriction 24 hours before trading, the battery can adjust its optimisation strategy accordingly. However, the nearer the curtailment signal is to gate clo-sure, the greater the risk of lost value, as there is less time to react and less flexibility to opti-mise.<\/li><\/ul>

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      • Typical revenue reduction is about 20%:<\/strong><\/em> Even with moderate restrictions. such as a 0.025% per second ramp constraint (about 1h up\/down), our analysis shows a typical asset value cut of around 20%, assuming ancillary ser-vices are still possible.\nRamp rates have a significant impact on battery optimization and can limit the usable capacity, particularly in ancillary services markets.\nFor example, Primary Reserve (PRL\/FCR) requires full activation within 30 seconds. Smaller battery systems often cannot ramp up to the minimum bid size of 1 MW within this timeframe and are therefore unable to participate in the PRL market.\nSecondary Reserve (SRL\/aFRR) allows up to 5 minutes for full activation, providing more op-erational flexibility. However, ramp rate constraints still limit the amount of capacity that can be offered in the ancillary services market, ultimately reducing revenue potential.<\/li><\/ul>

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        • FCAs resemble industrial restriction management:<\/strong><\/em> Industries have lived with grid constraints for decades, through limitation profiles, peak shav-ing, load shedding or grid-fee optimisation. The concept is not new but applying this to BESS optimisation depending on decisions in milliseconds, makes FCA complexity far more impact-ful.<\/li><\/ul>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t
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          BESS Investor Perspective: Reliability is non-negotiable<\/h2>\t\t\t\t<\/div>\n\t\t\t\t
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          Investors can live with FCAs, but they cannot live with surprise. Once capital has been de-ployed and the revenue model is locked, adding additional uncertainty, especially dynamic curtailments, creates exposures that even sophisticated hedging models struggle to price.<\/p>

          Christoph summed it up: \u201cFCAs can absolutely work, but not after capital is already invested.\u201d However, this view is not entirely shared in the market. Some argue that tolling is still possible with FCAs and that the key lies in risk structuring, not in the constraint itself. Thus, well\u2011organised optimisation houses should be able to handle it.<\/p>

          This might be the case, but in our view only a handful of players in Germany have the capabil-ity to structure tolling under dynamic FCAs. And in our experience, poorly designed FCAs cre-ate weak performing battery assets, as no optimisation will fix a structurally bad connection agreement.<\/p>

          Christoph agrees to the opinion that tolling is possible under FCAs but emphasized the central point: The challenge is not FCAs themselves, but dynamic FCAs, those that are not plannable. This distinction matters. A static or clearly communicated restriction can be priced and man-aged. A volatile, non\u2011forecastable one cannot.<\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t

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          Conclusion: How ESFORIN believes FCAs should be handled today<\/h2>\t\t\t\t<\/div>\n\t\t\t\t
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          Drawing from our operational experience, we offer the following perspective on how to navigate FCAs in the current regulatory and market landscape:<\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t

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          Treat dynamic FCAs with caution<\/h3>\t\t\t\t<\/div>\n\t\t\t\t
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          If an FCA includes restrictions that are not forecastable, not clearly communicated, or highly volatile, investors should assume a substantially lower value and optimisation accordingly.<\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t

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          Prefer transparent, predictable and communicated constraints for your battery storage<\/h3>\t\t\t\t<\/div>\n\t\t\t\t
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          A clear restriction profile, even a tough one. is more bankable than a flexible, unpredictable one.<\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t

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          FCAs must be priced before and not after commissioning<\/h3>\t\t\t\t<\/div>\n\t\t\t\t
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          Once the battery asset is built, retrofitting optimisation or renegotiating terms rarely works. Risk pricing is not optional. <\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t

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          To sum it up in Christophs expert opinion: \u201cFCA restrictions are manageable. Dynamic, un-plannable ones can operationally be managed but the modelling upfront is tricky and therefore the risk is to decrease a lot of or even too much of the battery storage\u2019s value. For now, FCAs should be structured with clear operational rules and predictable communication so they can be integrated into the optimisation responsibly.\u201d<\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t

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          Find out more now from our experts for flexibility marketing or battery storage optimization: <\/h3>\t\t\t\t<\/div>\n\t\t\t\t
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