Virtual Batteries Business Models for Energy Suppliers

Self-consumption regulations are leading to the emergence of new business models proposed by new players and causing traditional players to make new proposals to take advantage of the new business opportunities. In this context, traditional retailers are assessing self-consumption business models, offering management services for self-consumption structures, or the installation of distributed resources, such as solar panels or batteries. Some of the new business models being proposed by electricity suppliers are related to virtual battery services. Indeed, suppliers can, in the free retail market, create innovative tariffs, and design them to make their customers believe they own and manage a battery, even if it does not correspond to a physical battery in the grid. This paper analyses the business model of a supplier offering a virtual battery service, comparing it to the installation of a physical battery, showing that it has no significant benefits compared to more simple approaches.

I. Introduction

In 2023, the European countries agreed to reduce greenhouse emissions by at least 55% (relative to 1990) and to reach 42.5% of renewable share in final energy consumption by 2030 [1]. One of the main challenges for the renewable energy integration is the need for dispatchable storage, to store energy surpluses that are more and more frequent, to provide supply when there is lack of generation [2]. Grid-scale energy storage has been acknowledged as an essential technology to tackle this challenge [3]. Consumers can also play a fundamental role in the decarbonization process through the installation of PV systems with batteries. However, batteries are still expensive and require a large initial investment. In this sense, several business models have emerged in the storage area, such as the rental of batteries, the purchase of batteries with monthly payments, and more recently the concept of virtual batteries. The virtual battery business model is understood as a service provided by the electricity supplier to a consumer, in which the latter can “store/inject” its surplus energy in the grid for later consumption periods, without having an actual physical battery.