This study seeks to determine a suitable arbitrage strategy that allows a battery energy storage system (BESS) owner to obtain the maximum economic benefits when participating in the Colombian electricity market. A comparison of different arbitration strategies from the literature, such as seasonal, statistical, and neural networks-based models, is performed. To determine BESS’s optimal operation, a Mixed Integer Linear Programming (MILP) optimization problem is formulated, including a battery degradation model based on an upper piecewise linear approximation method. A financial evaluation of the different arbitrage strategies is carried out, resulting, for all the analyzed cases, in a negative net present value (NPV); thus, the results show that the income obtained from BESS when only performing energy arbitrage in the Colombian market do not compensate the investment costs. Results have also shown that strategies based on statistical and prediction models have a better performance than seasonal strategies, especially in atypical circumstances such as COVID-19.

This article proposes a co-optimization model that allows evaluating the simultaneous participation of energy storage systems (ESS) in arbitrage applications, secondary frequency regulation, and transmission investment deferral. The model considers the ESS degradation through an upper-piecewise linear approximation; constraints related to primary frequency energy reserve are also included in the model. The formulation is evaluated using historical data from the Colombian wholesale energy market. Eight case studies corresponding to the possible combinations of ESS participation in the three applications are analyzed. Subsequently, a financial evaluation is carried out for each case study, both from the system and the investor's point of view. The results show that the exclusive use of ESS to provide arbitrage is not economically viable in Colombia, while simultaneously providing secondary frequency regulation and restriction relief services is profitable, both for the system and for an investor agent.