The Profitability of Battery Arbitrage for the Average Homeowner in the Netherlands

As the share of renewable energy continues to rise throughout the European energy transitions, various flexibility measures are being implemented. One of these is battery energy storage, which provides this capability. It allows an energy system to hasten the transformation process.

Energy arbitrage makes battery storage economically viable. This article will analyze the energy arbitrage opportunities created by battery storage in the Netherlands. In general, the research shows that optimized planning of battery systems can create profitable financial opportunities for consumers in the Netherlands.

The Dutch Power Market

The Netherlands has implemented a fully liberalized power market where independent parties can participate in trading electricity. It is monitored carefully to ensure end-consumers can always access power at an affordable price.

Home Battery Storage Energy Arbitrage

In the Netherlands, a home battery allows you to store the power you generate from renewable sources or the grid. When using a solar system, a home battery allows you to utilize up to 80% of the power you generate.

The cost of a home battery will depend on various factors. The average cost is €750 per kWh of storage capacity. A home with a 5kWh battery will pay around €3,750 for it. There are several other costs, such as installation. There is currently no subsidy for home battery storage.

Besides solar panels, a home battery can be charged using grid power. Using a fixed or variable contract, you can program it to charge at the off-peak or nightly rate. A dynamic energy contract is where you get the real advantage. You can set the battery to charge at a low rate and use it when the price of grid power is high.

Energy Contract with Dynamic Hourly Day-Ahead Pricing

The dynamic energy contract differs from the fixed or variable energy contract in that you do not agree to a static rate. While, in theory, it means that you will not be faced with surprises, you are probably overpaying for power. In recent years, the dynamic rate has been below the average fixed price for around 85 percent of the time.

The spot market determines the price of energy for a dynamic contract. These prices change daily. It allows you to pay the same price that energy suppliers are paying. Energy prices are set in the day ahead market.

The Day Ahead Market (DAM) is the Dutch spot market for power. It is an international auction for the price of power the next day. It closes at noon every day, and the price is set for each hour of the next day.

Around 20% of all energy trades happen on DAM in the Netherlands. Its goal is to overcome forecast mismatches from implementing electricity traded via the bilateral market. The purchase price by suppliers may be higher than the price you pay. However, it is lower on average.

Prices are usually highest in the morning when industries and homes are powering on. During the middle of the day and at night, prices are low due to reduced demand. In 2023, sometimes prices have been so low in the spot market that they have gone negative. It means that during those periods, the energy supplier pays you to consume power and store in in your battery.

The rise of Variable Renewable Energy (VRE) has also led to major price fluctuation, a huge advantage for those with a dynamic energy contract. The average savings with a dynamic energy contract are 9ct/kWh based on current market trends.

Requirements for Battery Arbitrage

The main requirement is to have a battery storage system installed in your small business or home. A battery system consists of a battery, an inverter, and a battery management system (BMS).

You will also need a Smart Energy Trading software, which comes in the form of a control box. It taps directly into the energy markets, and controls when to buy, and sell power from the battery system.

Finally, you will need an energy contract, in this case a dynamic energy contract. It allows you to participate in the Dutch energy market and get power for the lowest price while selling it for the highest price possible.

Grid Connection Requirements

In the Netherlands, netting, or salderen, is only available to small consumer connections, kleinverbruikersaansluiting, which consume 3x25A and 3x80A of power. A large-scale consumer connection, grootverbruikersaansluiting, is not allowed to participate in salderen. What that means is that if the main fuse is rated as 3x25A, you have a total of 75 x 230 volts, which is 17,250 watts of maximum power consumption.

While a large-scale consumer connection is less lucrative, it is still profitable. For one, you will still lower the cost of power by purchasing it at the low end of the market and using it during peak hours.

Use Case

A good use case is during times of high wind and maximum sunshine. During that period, wind farms and solar panels work at their maximum capacity. The result is more energy than is needed in the grid. One reason for this is that power plants need to use less gas to generate power. If supply exceeds demand, power stations power down, which affects the hourly rate.

Hourly rates are usually the lowest between noon and 4 PM. The chance of getting negative hourly rates is on the weekends when most industries are powered down, holidays, and public holidays. To prevent excess energy flooding into the grid, solar parks and wind turbines sometimes power down for a while to prevent risk to the grid.

Aligning consumption to the lowest hourly rates can ensure you save a great deal of money. In some cases, you could even earn money. However, you will still need to pay energy tax and government levels, around 16 cents. If your dynamic contract offers 7 cents, you still have to pay 9 cents. Thus, you would only make real money if the energy price is lower than the tax.

While rare, it does happen. For instance, on April 23, 2022, the price of power from 11 AM to 4 PM went lower than the tax rate, allowing consumers to earn. At the time, buying power between 1 PM and 4 PM yielded 27 cents per kWh, excluding taxes.

Summary

In summary, battery storage arbitrage has numerous upsides and little risk. No matter your connection type, it is an opportunity to save money and, sometimes, even make money from the energy supplier.

You can get started today by contacting us. We will organize a site visit and determine your options. After that, we will prepare the paperwork for you to sign. After that, we will begin installation work which will be done by 30 days from the first site visit.

Contact Hoolia Energy today, and enjoy the benefits of dynamic energy contracts.