Optimal Spot Market Participation of PV + BESS: Impact of BESS Sizing in Utility-Scale and Distributed Configurations

Recent European regulations promote distributed energy resources as alternatives to centralized generation. This study compares utility-scale and distributed photovoltaic (PV) systems coupled with battery energy storage systems (BESS) in the Italian electricity market, analyzing different battery sizes. A multistage stochastic MILP model, using Monte Carlo PV production scenarios, optimizes day-ahead and intraday market offers while incorporating forecast updates. In real time, battery flexibility reduces imbalances. Here we show that, to ensure dispatchability—defined as annual imbalances below 5% of PV output—a 1 MW PV system requires 200 kWh of storage for utility-scale and 100 kWh for distributed systems, increasing LCOE by 12.6% and 3.8% respectively. NPV is negative for BESS performing imbalance netting only. Therefore, a multiple service-strategy, including imbalance netting and energy arbitrage, is introduced. However, maintaining dispatchability while performing arbitrage reaches economic optimum with a 1.7 MWh BESS for utility-scale systems and 1.1 MWh BESS for distributed systems. These results show lower PV firming costs than previous studies, and highlight that under a multiple-service strategy, better economic outcomes are obtained with larger storage capacities.