The BESS project will be located in Jurikkala, near the city of Lappeenranta, next to Neoen’s already operational 30MW/30MWh Jurikkala power plant, Finland’s first BESS.
System integrator Nidec ASI will provide BESS, power conversion equipment, engineering, procurement and construction (EPC) services for the project, which will be connected to grid operator Fingrid’s Illikkale substation. It is scheduled to be operational in the first half of 2025.
Neoen will be the long-term owner and operator of the project, which is based on a substantial presence of wind power in Finland.
Markets and regulations drive the shift to 2 hours
This project is notable not only for its size, but also for its two-hour duration. To date, projects have typically been around 1 hour long and have covered a variety of ancillary service revenue opportunities in the country (mFRR, aFRR, FCR-N, FCR-D, FFR).
Henri Taskinen, CEO of Finland-based BESS optimization company Capalo AI, explained that the move is due to new regulations by Fingrid and increased trading opportunities in the electricity market.
“The market is moving towards longer duration BESS (mainly 2 hours) for several reasons. Firstly, the Nordic TSOs have developed new regulations on batteries, which will come into force on September 1, 2023. This regulation addresses “limited energy storage,” meaning less than a two-hour battery, which has a significant impact on one-hour systems,” said Taskinen.
This regulation effectively limits the amount that a 1-hour BESS can bid for ancillary services compared to a 2-hour (or more) system.
The example given by Taskinen is a 10MW/10MWh battery; in the case of simultaneous bidding, FCR-N bids would be limited to 5MW (previously from 10MW), and FCR-D bids would be limited to 8.3MW above and below (previously from 10MW). ). With his 2 hour BESS, you don’t face these constraints and this is the main reason the market is moving towards his 2 hours.
The new regulation appears to be similar to a rule (premium access) that a Texas power grid operator tried to introduce but was recently rejected by energy regulators.
Another factor is market-driven. The opportunities for BESS in energy trading are growing as volatility increases, as seen in other European markets with a lot of BESS online, such as Germany and the UK, which increases the business case for two-hour systems. .
Taskinen: “This is one of the key factors to consider when acquiring BESS assets and choosing the right optimizer and market access partner. Long duration assets, if intelligently optimized, We will capture more revenue from the volatility of the wholesale market. We believe that the revenue stream will shift to wholesale, as we have seen in Germany.”
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