Batteries charging into the future? Techno-economical analysis of BESS participation on the Swedish frequency regulation market using a mixed method approach

Sammanfattning: As the penetration of variable renewable energy is increasing, the demand for flexibility in the electrical grid is on the rise. One way in which flexibility is needed is to provide frequency regulation. If electricity consumption and production momentarily are unbalanced there needs to. The Swedish TSO, Svenska Kraftnät, procures multiple different frequnecy regulation services to protect against these imbalances. As a result of falling costs, Battery Energy Storage Systems (BESS) are now a possible suppliers of frequency regulation. This thesis investigates the economic and technical feasibility for BESS on the Swedish frequency regulation market in its entirety, and which services are the most suitable for BESS. A mixed method approach is employed in the thesis. After presenting background for central topics, both quantitative and qualitative data was gathered. Modelling of price and frequency data of 2022, as well as an interview study with 12 interviewees, was conducted. Cycling degradation and energy costs were included in the modelling. In a parallel manner the two data types are analysed, and integrated in the discussion and conclusion sections. Through its result, the thesis shows that FCR-D and FFR are the most economically suitable frequency regulation services for BESS. With the price level of 2022, economic feasibility is high, with pay-back times of 1.6 years, and 64 \% IRR. The thesis further points out that the general price level is expected to drop due to an increase in supply. Simultaneously, regulatory changes are making BESS operation more independent and allowing for more liberal bidding strategies, increasing revenues this way.