Understanding the PJM DER Value Stack – Part II
Evaluating battery energy arbitrage, regulation services, and synchronous reserve opportunities using 2023 market data.
Energy Arbitrage
Regulation Service
Synchronous Reserves
Dispatch Strategy
In this second part of our assessment of distributed energy resources in PJM, we examine additional value opportunities available to battery energy storage systems, including energy arbitrage and ancillary services.
The analysis uses 2023 market data from the PSEG and ComEd zones to illustrate how battery location, operating strategy, and market participation can affect potential revenue.
Energy Arbitrage
Energy arbitrage involves charging a battery when electricity is relatively inexpensive and discharging when electricity prices are higher.
DECH evaluated average real-time PJM price differences during 2023 for the PSEG and ComEd zones. The analysis compared October through May with June through September and examined how price spreads varied by day of the week.
Summer price spreads were generally larger. Some unusually high ComEd interval prices also increased the calculated average opportunities during certain summer weekdays.
Annual Arbitrage Value — PSEG
Historical 2023 estimate per 1 MWh
Annual Arbitrage Value — ComEd
Historical 2023 estimate per 1 MWh
Period With Larger Price Spreads
These estimates assume daily charging and discharging that successfully captures the modeled price differences. They do not represent guaranteed revenue.
Ancillary Services
Battery storage can also provide grid-support services through PJM’s ancillary-service markets. The historical analysis compared regulation and synchronized reserves, two products with different operating obligations and revenue characteristics.
~$15,000 annually
Illustrative 2023 revenue per 1 MWh of eligible storage.
~$10,600 annually
Illustrative 2023 estimate based on selected high-value hourly intervals.
Regulation had the larger modeled revenue opportunity under these historical assumptions.
Regulation Service
PJM regulation compensation involves market-clearing, capability, and performance components. The analysis considered the Regulation Market Clearing Price and illustrative storage participation hours.
2023 Average Regulation Clearing Price
Per MW, as reported in the original analysis
Monthly Participation Hours Assumed
Annual Modeled Revenue per 1 MWh
Synchronous Reserves
Synchronized reserves provide additional capacity that can respond quickly when required by PJM. Battery resources must satisfy applicable eligibility, dispatch, and performance requirements.
The original analysis ranked hourly reserve prices by month and used the 30 highest-priced intervals to estimate an illustrative annual revenue opportunity.
The historical calculation produced an annual synchronous reserve revenue opportunity of approximately $10,600 for 1 MWh of storage.
Comparison of Regulation and Synchronous Reserves
Under the 2023 assumptions, the modeled regulation-service opportunity exceeded the synchronized reserve opportunity by roughly half.
These revenue streams should be evaluated in the context of battery operating requirements and competing energy-market opportunities.
Higher modeled annual ancillary-service revenue in the analysis.
Separate participation obligations and response requirements.
An additional opportunity competing for available battery capacity.
BESS Asset Management Considerations
Asset managers must decide how to allocate available storage capability between energy transactions and ancillary-service commitments.
Day-ahead prices, real-time opportunities, state of charge, and committed services influence dispatch decisions and the value ultimately realized.
Review Day-Ahead Prices
Compare Market Products
Commit Capacity
Manage Real-Time Dispatch
Our Takeaways
Battery storage brings operating flexibility to distributed energy and microgrid projects. Its market value depends on the location, available services, pricing, and management of competing commitments.
Understanding the interaction of arbitrage and ancillary-service opportunities is fundamental to evaluating PJM storage economics.
Historical analysis based on 2023 market data. Sources: PJM, ComEd, and PSEG.
Understand the PJM DER Value Stack
Evaluate the revenue opportunities, limitations, and operating tradeoffs of distributed energy investments.
