Developing your default operating strategy

Before going live with an Energy Storage Resource (ESR), it is important to hone in on the operating strategy that will be most effective for your asset. Given nodal variance, diversity of project types, and offtake or interconnection constraints, this is not the same for every battery.

Teams ought to think through parameters such as:

• How much should I be bidding into ERCOT Ancillary Services (AS) vs. energy products?
• How much capacity do I want to reserve for Real-Time Energy (RT) bidding?
• What is the minimum I need to make per battery cycle?
• What is your appetite for price or delivery risk (or your company’s risk policy)?
• Will the above be the same every day, regardless of conditions?

The most effective way to assess how different strategies will perform is to run them in an “as live” environment. In the months leading up to COD, we train our energy storage optimization platform on our customer asset’s node and project specifications, then configure multiple bidding strategies to observe how they perform.

This paints a realistic picture of how each strategy performs over time, in specific market conditions, and even on individual days. This also serves as valuable training for your team, as you can test strategies at no risk.

More on benchmarking performance >>

Energy markets evolve rapidly – a lot can change between the time companies develop an investment thesis for a project and the time they get the battery up and running. In 2024, we saw a large shift from ERCOT’s Ancillary Services being the primary revenue driver (with a larger portion of that energy storage revenue coming from ECRS), to energy arbitrage being a primary driver. 

2024 ERCOT Market Shifts:

• January: 92% of revenue came from AS (83% across all Q1)
• December: 33% of revenue came from AS (43% across all Q4), and the majority of revenue was in energy, with 70% coming from RT

Diving into a February winter event – we see how the different strategies play out:

February 19, 2025

On this day, the DA/RT + AS strategy had DA energy commitments that inhibited discharge into a higher evening RT energy prices.

• DA/RT+AS: unable to discharge into a late evening RT peak at 21:00 due to DA commitments, the strategy made $13.5K on the day
• RT+AS: caught the evening price peak and net $55K 

February 20, 2025

The very next day, the majority of the revenue opportunity was in DA energy – and the DA/RT+AS asset foresaw and discharged into the highest price hours. This resulted in significantly higher revenue than the RT+AS asset was able to make. 

• DA/RT+AS: sold into the high priced DA energy hours to make $148K 
• RT+AS: captured some elevated reserves and ECRS prices in the 7-9am period, but without DA energy only generated ~$84K

Where this gets really interesting is in all the variations you can test to hone in on the optimal approach. For example, within either of the above strategies we could also constrain all or some AS products, or increase our cycling limits for certain days forecasted to have higher price points, and more.

Bringing a BESS online is more than just flipping the switch — it requires careful preparation, testing, and an adaptive strategy that is poised to maximize energy storage revenue streams. By pre-empting unexpected operational hurdles and fine-tuning bidding approaches in an “as live” environment with their energy storage optimization platform, storage operators can position their assets for long-term success. As market conditions shift, the ability to iterate and optimize will separate the best-performing batteries from the rest. The key is to stay agile, leverage data-driven insights, and ensure your optimization strategy evolves alongside the market.