How Battery Energy Storage Systems (BESS) Work in Romania

A complete guide to energy storage battery technology, their applications in the Romanian energy market, and the investment opportunity in Europe's most dynamic emerging market.

What is a BESS System?

A BESS (Battery Energy Storage System) is an installation that stores electrical energy in batteries and releases it on demand. Unlike conventional power plants that produce energy through burning fuels or from renewable sources, BESS systems don't produce energy, but store it temporarily to optimize grid utilization.

In Romania, battery energy storage systems have become essential with the rapid growth of solar and wind energy capacity. Our country added over 2,000 MW of photovoltaic panels in 2024 alone, creating urgent need for grid flexibility solutions.

Operating principle

The operation of a BESS system is based on two fundamental processes:

• Charging: When energy prices are low or when there is surplus production from renewable sources, the BESS system absorbs energy from the electrical grid and stores it in batteries in chemical form.
• Discharging: When energy prices increase or when there is a deficit in the grid, the batteries release the stored energy back into the system, contributing to balancing supply and demand.

This cycle can be repeated thousands of times during the lifetime of a BESS system, with each modern lithium-ion battery capable of executing between 6,000 and 10,000 complete cycles before significant degradation.

Components of a BESS System

A complete battery energy storage system consists of several essential components working together to ensure safe and efficient operation:

1. Battery Modules

The core of any BESS system is represented by lithium-ion battery modules. These are organized in climate-controlled 20 or 40-foot containers (TEU), each container having capacity of 2-5 MWh. Modern batteries use LFP (Lithium Iron Phosphate) or NMC (Nickel Manganese Cobalt) technology, each with specific advantages:

For stationary storage applications in Romania, most BESS projects use LFP technology due to superior safety, long lifetime, and lower costs per cycle.

2. Power Conversion System (PCS)

The PCS is responsible for converting electrical energy between alternating current (AC) of the grid and direct current (DC) of the batteries. This system includes:

• Bidirectional inverters: Convert AC to DC during charging and DC to AC during discharge
• Transformers: Adapt voltage to the level required by the electrical grid (110 kV for Transelectrica connection)
• Protection systems: Circuit breakers, protection relays, safety devices

Efficiency of a modern PCS is 98-99%, meaning minimal losses in the conversion process.

3. Battery Management System (BMS)

The BMS is the "brain" of the BESS system, continuously monitoring and controlling the state of each battery cell. Main functions include:

• Monitoring voltage, current, and temperature of each cell
• Balancing charge between cells (cell balancing)
• Preventing overcharging or excessive discharge
• Estimating state of charge (SOC - State of Charge)
• Estimating state of health (SOH - State of Health)
• Protection against short circuits and overheating

4. Energy Management System (EMS)

At the upper level, the EMS makes strategic decisions about when and how to operate the BESS system to maximize profitability:

• Analyzes real-time prices on DAM, IDM, and balancing markets
• Receives signals from Transelectrica for AFRR and FCR balancing services
• Optimizes charge/discharge cycles to extend lifetime
• Calculates financial projections and performance reports
• Integrates weather forecasts to anticipate renewable production

5. Climate control and safety system

Lithium-ion batteries function optimally at temperatures between 15-30°C. BESS systems include:

• HVAC (Heating, Ventilation, Air Conditioning): Maintains constant temperature inside containers
• Fire detection and suppression systems: Smoke detectors, aerosol or inert gas systems (NOVEC 1230)
• Video monitoring and access control: 24/7 physical security

Lithium-Ion Battery Technology

Lithium-ion batteries have revolutionized the energy storage industry due to high energy density, superior efficiency, and rapid cost reduction. In the last 10 years, lithium-ion battery prices have dropped by over 85%, from approximately $1,200/kWh in 2010 to under $150/kWh in 2024.

Lithium-ion battery chemistry

A lithium-ion cell consists of:

• Anode (negative electrode): Usually graphite, which stores lithium ions during charging
• Cathode (positive electrode): Metal oxides (LFP, NMC, NCA) that release lithium ions during charging
• Electrolyte: Liquid solution or gel that allows transport of lithium ions between electrodes
• Separator: Porous membrane that prevents short circuit between electrodes but allows ion passage

Advantages of lithium-ion technology for BESS in Romania

BESS Applications in Romania

Battery energy storage systems have multiple applications in the Romanian energy market, each generating distinct revenue streams:

1. Balancing services for Transelectrica

This is the primary and most profitable application for BESS in Romania. Transelectrica, the national transmission and system operator, procures balancing services to maintain constant frequency at 50 Hz:

• AFRR (Automatic Frequency Restoration Reserve): Automatic frequency reserve with 30 seconds - 15 minutes activation. Average prices of 80-150 EUR/MW/day for capacity + activated energy
• mFRR (Manual Frequency Restoration Reserve): Manual reserve with 15 minutes activation. Prices 30-60 EUR/MW/day
• FCR (Frequency Containment Reserve): Primary reserve with instantaneous response (<2 seconds). Prices 40-80 EUR/MW/day

BESS systems can participate simultaneously on multiple reserve markets, offering maximum flexibility and multiple revenues. For example, a 15 MW system can allocate:

• 10 MW for AFRR (24/7)
• 3 MW for FCR (24/7)
• 2 MW available for energy arbitrage during high-price periods

2. Energy Arbitrage

Energy arbitrage consists of buying energy at low prices and selling it at high prices. In Romania, arbitrage opportunities are significant due to market volatility:

A 15 MW / 30 MWh BESS system can execute 1-2 complete cycles per day, generating annual revenues of 500,000 - 1,500,000 EUR from arbitrage alone, depending on trading strategy and market conditions.

3. Renewable energy integration

Romania has set a goal to reach 1,200 MW BESS storage capacity by 2030 (according to NRRP). This capacity will be essential for:

• Absorbing excess solar energy in midday hours (10:00 - 16:00)
• Releasing stored energy during peak hours (18:00 - 22:00) when demand is maximum
• Reducing curtailment phenomenon (forced shutdown of renewable production)
• Minimizing need to export energy at low prices to neighboring countries

4. Distribution network support

At local distribution level, smaller BESS systems (1-5 MW) can be installed for:

• Reducing network congestion
• Deferring infrastructure upgrade investments
• Improving voltage quality
• Backup power for critical consumers (hospitals, data centers)

Balancing Services: AFRR and FCR Explained

To understand how a BESS system generates revenue in Romania, it's essential to understand the balancing services mechanism.

Why are balancing services necessary?

The electrical grid operates at a constant frequency of 50 Hz. Any imbalance between production and consumption causes frequency deviations:

• If production > consumption → frequency increases (above 50 Hz)
• If consumption > production → frequency decreases (below 50 Hz)

Frequency deviations of over ±0.2 Hz can damage equipment and, in extreme cases, cause nationwide blackouts. To prevent this, Transelectrica procures balancing reserves that intervene automatically or manually to correct frequency.

AFRR (Automatic Frequency Restoration Reserve)

AFRR is the secondary balancing service, with automatic activation in 30 seconds - 15 minutes. BESS systems are ideally suited for AFRR due to:

• Fast response time: Under 1 second to maximum power
• Precision: Can supply exactly the requested power (e.g., 7.34 MW)
• Bidirectionality: Can both absorb energy (high frequency) and supply energy (low frequency)

AFRR revenues come from two sources:

1. Capacity payment (Availability Payment): Fixed amount for being available, even if not activated. Example: 100 EUR/MW/day × 15 MW × 365 days = 547,500 EUR/year
2. Activation payment (Activation Payment): Payment for each MWh actually supplied or absorbed. Example: 150 EUR/MWh × 10,000 MWh/year = 1,500,000 EUR/year

FCR (Frequency Containment Reserve)

FCR is the primary reserve, with instantaneous response (under 2 seconds) and proportional operation to frequency deviation. FCR acts continuously to maintain frequency near 50 Hz.

BESS systems are exceptional for FCR because they can:

• Respond in under 300 milliseconds (well under the 2-second requirement)
• Supply linear power proportional to frequency deviation
• Operate symmetrically (both frequency increase and decrease)

FCR revenues are only for capacity, without separate payment for activated energy: 50-80 EUR/MW/day in Romania (2024-2025).

Portfolio optimization of services

A 15 MW / 30 MWh BESS system can be optimized to participate on multiple markets simultaneously:

Energy Arbitrage on Romanian Markets

Beyond balancing services, energy arbitrage represents the second major revenue source for BESS systems in Romania.

Day-Ahead Market (DAM)

On the DAM market, operated by OPCOM, energy is traded for the next day. Prices are established through hourly auctions, with market closure at 12:00 for the next day.

The typical DAM price profile in Romania shows:

• Hours 02:00 - 06:00: Minimum prices (20-50 EUR/MWh) - low demand, high wind production
• Hours 10:00 - 15:00: Medium prices (60-90 EUR/MWh) - high solar production compensates demand
• Hours 18:00 - 22:00: Maximum prices (100-200 EUR/MWh) - peak consumption, zero solar production

A BESS system can profit from these differences through:

1. Buying energy at low prices (charging batteries night/early morning)
2. Selling energy at high prices (discharging batteries evening)

DAM arbitrage cycle example:

• Charging: 30 MWh at 30 EUR/MWh = 900 EUR cost
• Discharging: 27 MWh at 120 EUR/MWh = 3,240 EUR revenue (assuming 90% round-trip efficiency)
• Net profit: 3,240 - 900 = 2,340 EUR per cycle
• At 250 cycles/year: 585,000 EUR/year

Intraday Market (IDM)

The IDM market allows continuous trading of energy for the same day, with closure up to 5 minutes before delivery. IDM is extremely volatile, with larger but riskier arbitrage opportunities:

• Spreads up to 200-300 EUR/MWh between consecutive hours
• Fast reaction to unexpected events (plant shutdowns, weather variations)
• Possibility to profit from updated weather forecasts for renewable energy

Balancing Market

After end of delivery day, the balancing market settles imbalances between scheduled energy and actually consumed/produced energy. Balancing market prices can reach extreme values:

• Normal events: 50-150 EUR/MWh
• Stress events: 300-500 EUR/MWh
• Critical situations (imminent blackout): over 1,000 EUR/MWh

BESS systems with advanced EMS can strategically participate on the balancing market, deliberately creating small imbalances to profit from favorable prices.

Regulatory Framework in Romania

The development of BESS systems in Romania is supported by a modern regulatory framework, aligned with European directives:

ANRE Regulations

ANRE (National Energy Regulatory Authority) has issued specific regulations for storage systems:

• Order 65/2021: Approves the Transmission Grid Code including technical requirements for BESS connection
• Order 150/2022: Establishes participation rules on AFRR, mFRR, FCR balancing markets
• Order 28/2023: Updates connection tariffs and grid access regulations for storage capacities

Technical requirements for connection to Transelectrica network

To connect to the 110 kV transmission network, a BESS system must meet strict technical requirements:

• Minimum capacity: 1 MW for balancing market participation
• Response time: Under 30 seconds for AFRR, under 2 seconds for FCR
• Availability: Minimum 98% per year
• Grid Code compliance: Voltage support capabilities, frequency protections, voltage sag ride-through
• SCADA system: Real-time communication with National Dispatch Center

Incentives and support schemes

The Romanian Government, through the National Recovery and Resilience Plan (NRRP), has allocated significant funds for storage capacity development:

• Investment C1.I1: 300 million EUR for BESS systems by 2026
• 2030 Target: 1,200 MW installed battery storage capacity
• Grants: Up to 40% of investment cost for pilot and demonstration projects

However, most commercial BESS projects, such as those developed by Battery.Network, are economically viable without subsidies, due to consistent revenues from balancing services and energy arbitrage.

Economic and Environmental Benefits

Battery energy storage systems bring multiple benefits for both investors and the national energy system and environment:

Economic benefits for investors

• Multiple revenues: AFRR, FCR, energy arbitrage, mFRR - revenue source diversification
• High profit margins: EBITDA margins of 60-75% for well-managed projects
• Fast ROI: Investment recovery period of 5-7 years for commercial-scale projects
• Resale value: Operational projects can be sold to institutional investors (pension funds, insurance) with attractive multiples (8-12x EBITDA)
• Scalability: Possibility to add modular capacity as market grows

Benefits for national energy system

• Grid stability: Reduction of frequency and voltage fluctuations
• Renewable integration: Enables adding over 5,000 MW of solar and wind energy without major grid upgrades
• System cost reduction: Diminishes need to maintain conventional plants in cold reserve
• Infrastructure investment deferral: BESS can solve local congestions without new transmission lines
• Energy security: Backup capacity in crisis situations (cyber attacks, extreme weather events)

Environmental benefits

By facilitating renewable energy integration, BESS systems directly contribute to Romania's climate objectives:

• 55% reduction in greenhouse gas emissions by 2030 (vs 1990)
• Reaching the 30.7% renewable energy target in gross final consumption
• Climate neutrality by 2050 (European Green Deal)

The Future of Energy Storage in Romania

The energy storage market in Romania is in the exponential growth phase. Factors that will drive this expansion include:

1. Growth of renewable capacity

Romania is adding annually:

• 1,500-2,000 MW solar energy (2024-2028)
• 500-1,000 MW wind energy (onshore and offshore projects in the Black Sea)

This rapid growth creates the need for 3,000-5,000 MW BESS storage capacity by 2035 to maintain grid stability.

2. Technological developments

Battery technology continues to evolve rapidly:

• Solid-state batteries: 50% higher energy density, increased safety, estimated to become commercial after 2028
• Sodium-ion batteries: Cheaper alternatives to lithium-ion, ideal for long-duration stationary storage
• Flow batteries: For 4-8 hour storage applications, with 20-25 year lifetime
• Hybrid systems: BESS + green hydrogen combination for seasonal storage

3. Cost reduction

BESS system prices will continue to decline:

• 2024: 250-300 EUR/kWh (complete system)
• 2027: 180-220 EUR/kWh (projection)
• 2030: 120-150 EUR/kWh (projection)

This reduction will make BESS projects even more profitable and accelerate adoption.

4. New business models

The storage industry will see emergence of new business models:

• Energy-as-a-Service (EaaS): BESS owned by third parties, consumers pay for storage services
• Virtual Power Plants (VPP): Aggregation of hundreds of small BESS systems into a virtual power plant
• Peer-to-peer energy trading: Blockchain platforms for direct trading of stored energy
• Vehicle-to-Grid (V2G): Integration of electric vehicles as distributed storage systems

Battery.Network: Pioneer in Energy Storage in Romania

Battery.Network develops the largest private portfolio of battery energy storage systems in Romania, with 45 MW / 90 MWh capacity strategically distributed across three locations:

Technology and partners

Battery.Network uses state-of-the-art technology from global leaders:

• LFP Batteries: CATL or BYD (global leaders with over 60% market share)
• Inverters: SMA, Sungrow or Power Electronics (99% efficiency, proven track record)
• EMS: Proprietary energy trading optimization system with ML/AI for price prediction
• EPC Contractor: Certified partners with experience in BESS projects >100 MW in Europe

Financial projections

Conclusion

Battery energy storage systems (BESS) represent the future of energy infrastructure in Romania. With a rapidly growing market, favorable regulatory framework, and multiple revenue opportunities, BESS investments offer a rare combination of positive environmental impact and attractive financial returns.

As Romania accelerates its transition to renewable energy, the need for grid flexibility through BESS systems will grow exponentially. Investors who act today will benefit from first-mover advantage in a market with 10x growth potential by 2035.

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