Value Stacking: Application of BESS to many typical use cases

Battery Energy Storage Solutions (BESS) are a critical enabler of New Zealand’s renewable energy future. By enhancing system resilience and supporting the uptake of variable renewables, BESS is fast becoming a cornerstone technology in energy innovation. As battery costs continue to decline and new chemistries emerge, the opportunities for widespread adoption are increasing.

Ara Ake, in collaboration with Sapere, previously investigated the potential for a BESS pilot. Findings revealed that relying solely on the New Zealand electricity market does not generate sufficient revenue to make BESS economically viable. Even a real-world network deferral example failed to meet the necessary economic threshold.

However, a BESS could become viable if it provides significant additional value beyond market revenue (such as energy arbitrage and instantaneous reserves). For instance, instead of merely deferring network investment, a BESS that eliminates the need for infrastructure upgrades while leveraging other revenue streams could unlock
greater economic benefits. From a national perspective, non-network solutions solving network challenges could deliver substantial value, particularly if they integrate multiple revenue sources.

The paper explores the economic viability of BESS through value stacking where multiple revenue streams such as energy arbitrage, provision of instantaneous reserves, peak demand reduction, frequency response, and network investment deferral are combined to
justify investment. It presents scenario modelling of typical use cases across different sectors to assess how BESS can be commercially deployed and where barriers remain.

This report has been prepared for Ara Ake by Sapere Research Group, specifically by Directors, David Reeve and Toby Stevenson.

More information on the Ara Ake website: Value Stacking: Application of BESS to many typical use cases