If there was one term on nearly everyone’s lips at ees Europe 2025, it was undoubtedly “energy trading.” An increasing number of battery storage providers are tapping into the potential of energy trading, integrating trading strategies into their business models to generate additional revenue. The benefit for end customers is significant: participating in energy trading can lead to a much faster return on investment for battery storage systems, often several years earlier than without trading activities.
Sepehr Soltani, Senior Analyst at Rystad Energy, a research and energy intelligence consultancy in Norway, talked at this year’s ees Europe Conference about that trending topic. In the session titled Unlocking Profitable Utility-Scale BESS in Europe: Challenges and Opportunities in the Spot Market , he introduced various revenue models and explored the question of whether the use of energy storage could eventually cannibalize the arbitrage business itself. This article summarizes the key takeaways from his talk.
“It is possible to run a profitable utility-scale BESS business solely through energy trading,” said Sepehr Soltani. A successful participation in the market requires the selection of a suitable revenue strategy. These strategies can be broadly divided into contracted revenue and merchant revenue streams.
One example of contracted revenue is a Power Purchase Agreement (PPA) – a long-term electricity supply contract between two parties, such as a storage provider and an energy supplier, industrial company, or utility company. PPAs are gaining traction: While only seven battery storage PPAs were signed last year in Europe, the number has more than doubled to fifteen this year.
Additionally, new market mechanisms are emerging for balancing services, including innovations like virtual inertia. This involves software-controlled systems – such as battery inverters or wind turbines – mimicking the stabilizing effect of physical inertia. These systems monitor grid frequency in real time and quickly inject or absorb power to reduce frequency fluctuations.
Each revenue model has its own advantages and drawbacks. Merchant revenue tends to be more volatile, introducing greater risk for investors or operators but also offering the potential for higher returns. In contrast, contracted revenue typically ensures a more stable and predictable income stream, which can be especially beneficial for securing financing and ensuring long-term project viability in the BESS sector.
In a further step, companies that participate in energy trading must analyze the potential for energy arbitrage in the European markets. Soltani illustrated this using the example of the largest European energy markets in 2023 and 2024. In 2023, BESS could generate up to 120 euros per MWh on average through energy trading. The top-performing countries included Bulgaria, Romania, Greece, the Baltic States, and Hungary.
“In 2024, these figures rose further due to the continued expansion of renewable energy,” Soltani explained. “Bulgaria, Romania, and Hungary surpassed 180 euros per MWh through energy trading alone. While this increasing price volatility may pose challenges for solar and wind developers, it is very promising for battery storage operators, who can capitalize on the fluctuations to generate revenue.”
With the average Levelized Cost of Storage (LCOS) in Europe ranging between 60 and 70 euros per MWh in 2024, almost all European markets present profitable opportunities for battery storage – even based solely on energy trading.
Market dynamics vary significantly across Europe, and Hungary offers a striking example. In July 2024, Hungary recorded energy trading revenues of approximately 350 euros per MWh, followed by another peak of around 230 euro per MWh in November. Combined with the steady baseload from nuclear power, this has led to significant price volatility – a key driver of energy arbitrage opportunities. Battery energy storage systems only accounted for a small share.
The situation was different in the United Kingdom: With a storage share of over 10% in the power mix, the country is increasingly smoothing out price peaks. As a result, the market is experiencing lower price volatility and decreasing arbitrage potential, despite selectively high revenues of EUR 130 per MWh in December 2024 with a two-year average of only EUR 80 per MWh. This suggests that countries with higher shares of energy storage in their power mix may cannibalize their own energy arbitrage potential.
With an average generation of 80 euros per MWh in 2024, the UK is close to the average LCOS in Europe. Therefore, energy trading alone does not ensure profitability for countries such as the UK, which is why they are increasingly making use of revenue stacking, such as allocating part of the storage capacity to frequency control markets.
Soltani concluded: “When it comes to energy trading, the country’s power mix plays a crucial role. I also want to stress that, while increasing storage capacity could reduce arbitrage revenues, the risk of real market cannibalization is still far off. It will not happen within this decade.”
Despite Hungary achieving the highest arbitrage returns through energy trading in 2024, its energy market remains highly volatile. One striking example occurred on May 2, 2024, when the spot price dropped to minus 100 euros per MWh. On that day, energy supply far exceeded demand. Non-flexible nuclear power served as the baseload, while a surge in solar generation led to oversupply.
Similarly on May 6, 2024, the spot price fell to 0 euros per MWh. Once more, a combination of inflexible nuclear generation and high solar output exceeded demand, resulting in high potential profits from energy trading on that day.
Soltani clearly argues against the assumption that the most profitable electricity mix must contain fossil fuels or nuclear power: “Energy storage, serving as a flexible asset, is crucial for the expanded integration of renewable energy sources. At Rystad Energy, we believe that combining solar power with BESS offers a competitive LCOE. Today, the total cost of generating electricity from a solar-plus-storage system is already lower than the cost of building and operating a new nuclear power plant. In addition, solar and BESS projects can typically be deployed much faster than nuclear facilities.”
This advantage also applies when comparing solar and BESS to natural gas. The LCOE of a new gas-fired power plant is generally higher than that of current solar-plus-storage systems. As a result, when planning future energy investments, solar with storage stands out as a more cost-effective and time-efficient option compared to both nuclear and gas.
In conclusion, Soltani explained that the rapid expansion of renewable energy sources such as solar and wind is lowering electricity prices while simultaneously creating greater price volatility throughout the day. This dynamic opens up profitable opportunities for battery storage operators, who can purchase electricity when prices are low, store it, and sell it later when demand and prices are higher. As a result, energy trading is becoming an increasingly attractive business model.
At the same time, advancements in battery technology are improving system durability and efficiency and driving down production costs. These developments are making electricity storage more economically viable, enabling battery systems to enter new markets where energy trading can generate substantial returns.
In addition to traditional trading on the day-ahead electricity market, new revenue streams are emerging for battery storage operators. These include providing grid stability services such as virtual inertia and fast frequency response, as well as participating in intraday energy markets. The combination of these income sources suggests that the battery storage sector may be entering a “golden era” in the coming years.