Making financial use of fluctuations in the electricity market for batteries Interview with Amani Joas, Founder of CF Flex Power

In this interview, CF Flex Power Founder, Amani Joas, explains how they make optimum use of the mechanisms of the electricity market for its new battery storage products.

EEHH: How does electricity trading work? What mechanisms are used for this?

Amani Joas: “Electricity is sold by the hour on the day-ahead-market. FlexPower buys its electricity during the cheapest hour and uses this to charge its storage system, at lunchtime for example. The storage system is then used when it’s dark and there’s not much renewable electricity available, during the evening. Intraday auctions work in a similar way, but achieve even more volatile prices. In this case, electricity is traded every fifteen minutes and the margins are much higher than on the day-ahead-market, due to the extreme price fluctuations. Continuous intraday trading takes place after the fifteen-minute auctions. This is when price volatility is at its highest and automated algorithms optimise the operation of our batteries in real time. We also publish our FlexIndex, which shows the revenues that can be achieved for battery storage.

I’ve worked in the renewable energies sector since 2013 and identified storage systems as a profitable business model early on. Current storage systems are basically containers with new modules or even ‘second-life’ batteries, from electric cars for example. So the technology is relatively simple and doesn’t require any funding. We rely on the mechanisms of the free market."

EEHH: Why is the development of battery storage urgently required?

Amani Joas: "50% of electricity in Germany is currently produced from renewable sources; electricity consumption is 600 TWh. But experts are already predicting that demand for electricity will quickly increase to 1,000 TWh, i.e. a significant expansion of renewable capacities is urgently required. Due to the volatility of renewable energy, electricity supply often outstrips demand – it is curtailed. In order to avoid this situation in future, storage capacities must be expanded – to 30 Gigawatt by 2030. There’s currently only 1.5 Gigawatt."

EEHH: Which particular products have you developed?

Amani Joas: "In the old energy landscape, there was a great deal of certainty among banks, i.e. investors. Locations and terms were known, prices were guaranteed. Things are very different in the new energy landscape, as you know. Investors are exposed to price risks in a highly volatile market and receive no government support. We also have a situation where electricity consumers fear volatility, while new investors in battery storage, usually private equity funds, benefit from this volatility. This is where FlexPower comes into play. We’ve developed FlexHL at PowerMatch. This allows battery storage investors to protect themselves against falling volatility, while electricity consumers can hedge against rising volatility."

EEHH: What’s happening in other countries?

Amani Joas: "In the UK, there’s a much more liberal electricity market with less regulation. Because it is an island, there’s a greater need for storage. Especially for so-called ancillary services. For example, BayWar r.e. is developing the largest energy storage system to date in Stockton-on-Tees in the north east of England. The system has a storage capacity of 171 MWh and is intended to improve network stability and make the local power grid more flexible. In addition to the UK, the Netherlands also has extensive battery storage. RWE is due to build a battery storage facility with a capacity of 41 megawatt hours in Eemshaven."