Welfare Benefits of Co-optimization of Energy and Reserve with Battery Storage in Belgium

Abstract

This thesis investigates the welfare implications of co-optimising energy and reserve mar- kets in the Belgian electricity system, with a specific focus on Battery Energy Storage Systems (BESS). A detailed day-ahead market-clearing model is developed using mixed- integer linear programming (MILP). The co-optimised formulation is benchmarked against sequential clearing (reserve-first), where BESS operate purely for energy arbitrage. Eight representative seasonal day types are examined to approximate full-year operation. Co- optimisation reduces annual system cost by up to 1.3 (average 10.01 %) while improving reserve deliverability and BESS utilisation. Sensitivity studies quantify how fixed commit- ment, battery participation scope and reserve pricing affect welfare. The findings motivate integrated market design and highlight the value of storage under different clearing archi- tectures.This thesis investigates the welfare implications of co-optimising energy and reserve mar- kets in the Belgian electricity system, with a specific focus on Battery Energy Storage Systems (BESS). A detailed day-ahead market-clearing model is developed using mixed- integer linear programming (MILP). The co-optimised formulation is benchmarked against sequential clearing (reserve-first), where BESS operate purely for energy arbitrage. Eight representative seasonal day types are examined to approximate full-year operation. Co- optimisation reduces annual system cost by up to 1.3 (average 10.01 %) while improving reserve deliverability and BESS utilisation. Sensitivity studies quantify how fixed commit- ment, battery participation scope and reserve pricing affect welfare. The findings motivate integrated market design and highlight the value of storage under different clearing archi- tectures.