The case for cross-market optimization: Trading BESS on a moving horizon

In power markets increasingly shaped by renewables, Battery Energy Storage Systems (BESS) are ideally positioned to absorb excess generation and fill supply gaps. This makes it an exciting – but complex – time to trade batteries. To secure strong, sustained revenues from BESS, short-term traders must now navigate a volatile and often risky landscape, one that spans multiple products and decision points.

This article breaks down the trading landscape across ancillary services, spot markets, and the balancing market. It explains why cross-market optimization is becoming essential, drawing on data and real-world examples from the Benelux region.

Ancillary services: No longer the go-to for BESS

For years, Frequency Containment Reserve (FCR) was the go-to trading product for batteries. Its fast response times, combined with relatively stable pricing, made it a low-risk, high-return entry point.

But as participation has increased, margins have declined. As shown below, weekly FCR prices are on a steady downward trend across Europe.

While FCR still offers occasional spikes worth capturing, it is no longer sufficient as a standalone strategy.

Spot markets: Volatility turns into opportunity

With FCR revenues diminishing, attention has shifted to the day-ahead and intraday markets. Here, capacity is committed in the day-ahead auction and continuously optimized in the intraday market.

Since the energy crisis, volatility, as illustrated by this graph, has become the new norm on the day-ahead market, a trend driven mostly by a growing share of intermittent renewables.

Although challenging, this volatility plays to the strengths of BESS. Rather than relying on high absolute prices, traders can arbitrage spot price spreads. On average, daily spreads for the last 12 months hover around €113/MWh, offering considerable upside.

However, there’s a trade-off. Locking in spot profits limits traders’ flexibility. The downside is missing out on sharper price signals in the balancing market.

The balancing market: Opportunity meets risk

The balancing market provides a trading opportunity in real-time after other markets have closed. Compared to spot markets, its price spreads are wider, but the risks are also higher.

Notably, 2023 and early 2024 saw a strong run for passive balancing in the Benelux area. But by mid-2024, things became more complicated.

Evolving rules in the Dutch balancing market

For starters, dual pricing – or regulation state 2 – surged in the Netherlands. The measure applies when both upward and downward balancing are activated within the same PTU, penalizing both positive and negative imbalance positions. To reduce the aggressiveness of market participants overshooting their positions in response to real-time price signals, TenneT introduced a 5-minute delay to its minute balance signal (on top of their previous delay of 1 minute).

Furthermore, the cross-border balancing platform PICASSO was implemented in Belgium and the Netherlands, creating a dampening effect on imbalance prices.

The image below shows the evolution of imbalance prices in the Netherlands, pinpointing the developments mentioned above:

For traders on the Dutch market, the impact of dual pricing has been notable not just in terms of frequency but also price spreads. In 2024, price spreads during dual pricing events peaked at €3,343/MWh. As of early 2025, we’ve already reached €2,400, with more to come.

A real-world example

Let’s zoom in on a real example from the Dutch balancing market to understand the risks of TenneT’s signal delays in action. The plot below covers a 45-minute window, spanning three PTUs, on the morning of 4 March 2025.

A trader following TenneT’s minute price signal might have seen the following:

• First PTU (11:30-11:35): The minute price is -€30/MWh, prompting a charge decision.
• Second PTU (11:45-12:00): For the first 8 minutes, the signal continues downward, reaching -€440/MWh. With no sign of upward prices, the trader likely maintains the charge position. Then, in minute 8, the upward minute price appears at +€59/MWh, spiking to +€1,672/MWh in the last two minutes.
• Third PTU (12:00-12:15): A clear upward signal emerges between minutes 2 and 5, allowing a discharge response.

This sequence led to a major mismatch between real-time expectations and market reality. The strategy, based on delayed signals, resulted in:

• Charging for 17 minutes at an average cost of +€1,895/MWh
• Discharging for 3 minutes at -€1,378/MWh

In this case, the trader made a significant loss of ~€3,273/MWh because the direction of price movement was ultimately reversed by the settled prices. Notably, these PTUs were single-priced.

Cross-market optimization: The key question

So, how can traders maximize BESS value across this dynamic horizon?

It starts with a mindset shift, from isolated bidding decisions to strategic flexibility management. At each point, traders can determine their position by asking the following question:

“What is the current value of my flexibility compared to its expected future value, considering all constraints from previous trades?”

Cross-market battery optimization is the coordinated use of battery capacity across all relevant power markets: ancillary, day-ahead, intraday, and balancing. When executed well, it significantly increases profitability while minimizing the risk.

Two capabilities are critical to achieve this:

• Price forecasting, to anticipate market conditions and revenue potential
• Optimization engine, to account for asset constraints and market dynamics

Change is the only constant

In conclusion, single-market BESS trading strategies are no longer enough. Power markets are evolving fast, and what worked yesterday may already be outdated.

Success now depends on your ability to shift between markets, manage uncertainty, and extract value wherever it appears. Realizing that value requires knowing when to commit and when to hold. That’s why cross-market optimization delivers the strongest business case for BESS trading, balancing risk with return.

At Dexter Energy, we provide the building blocks to make this strategy work in practice. Our forecasting and optimization solutions help you maximize revenue by trading your MWs (flexibility) alongside your MWhs (output). Get in touch to learn more!