Energy assets. Markets. Insights.
A practical starting point for battery, solar park and flexible energy asset owners. Explore the technology and markets, and find your next question.
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01 / VPP
How does a Virtual Power Plant work?
Explore how distributed energy assets are connected and aggregated. →
02 / TECHNOLOGYKanter Connect
The connection between a physical energy asset and its control platform. →
03 / MARKETElectricity prices and flexibility
Understand price signals and the different market layers. →
Topics
Virtual Power PlantBattery StorageFrequency MarketsElectricity MarketsSolar + StorageKanter Connect / TechnologyMarket UpdatesCase StudiesGlossary
Virtual Power Plant
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Battery Storage
Articles in this topic are published after editorial review.
Frequency Markets
Articles in this topic are published after editorial review.
Electricity Markets
Articles in this topic are published after editorial review.
Solar + Storage
Articles in this topic are published after editorial review.
Kanter Connect / Technology
Articles in this topic are published after editorial review.
Market Updates
Articles in this topic are published after editorial review.
Case Studies
Articles in this topic are published after editorial review.
Glossary
The return on a battery investment cannot be assessed without understanding the market. This glossary collects the terms used in the VPP Profitability Model report: assets, the electricity grid, electricity markets, reserve markets and financial metrics. The explanations are factual and come from the terms appendix of the model report.
Assets and controlElectricity grid and connectionElectricity marketsReserve marketsFinancial metrics
Assets and control
- PV plant
- Solar power plant: inverter(s) and solar panels that convert sunlight into electricity.
- PV specific yield (kWh/kWp per year)
- The solar plant's annual output (kWh) divided by the rated capacity of the panels (kWp). It shows how many kWh one kilowatt of panels produces per year and depends on location, panel orientation, tilt and shading.
- BESS
- Battery Energy Storage System: batteries together with an inverter and control system that store electricity and later release it for consumption or to the grid.
- RTE
- Round-Trip Efficiency: the percentage of the energy charged into the battery that can be taken back out; the rest is lost as heat.
- SOH
- State of Health: the battery's usable capacity as a percentage of the capacity of a new battery; it decreases with ageing and use.
- Inverter clipping
- The instantaneous power of the solar panels exceeds the inverter's maximum power, so the inverter cannot pass the surplus energy on and it is lost. If the battery is connected on the direct current (DC) side before the inverter, this energy can be stored in the battery. The model assumes a DC connection.
- VPP
- Virtual Power Plant: joint software-based control of several distributed assets (e.g. batteries, solar plants, flexible consumption) so that they take part in electricity and reserve markets as a single plant.
- Control logic
- The rules the model uses at each time step (60 min) to decide when the battery charges and discharges and where the solar plant's output goes (to consumption, to the battery or to the grid).
Electricity grid and connection
- TSO
- Transmission System Operator: responsible for the balance and frequency of the power system and procures reserves for this purpose. In Estonia, Elering AS.
- Distribution system operator
- The company whose grid the site is connected to (e.g. Elektrilevi). It sets the connection capacity and network charges.
- Connection capacity
- The maximum power allowed by the connection agreement between the site and the electricity grid, set separately for feeding into the grid (export) and drawing from the grid (import). It limits the export of the solar plant and battery, charging the battery from the grid and the capacity offered as reserves.
- Curtailment
- Forced reduction of generation or export because of the grid: (1) the connection capacity is lower than the possible output of the solar plant and battery, or (2) the distribution system operator or TSO temporarily limits generation. The model accounts for case (1); case (2) is not modelled.
- Total electricity price
- Everything a consumer pays for one megawatt-hour bought from the grid: the energy price (the average exchange price plus the supplier's purchase margin, or the fixed contract price), the network transmission fee (day and night tariffs weighted by consumption), the renewable energy fee, electricity excise duty, the security of supply fee and the balancing fee; excluding VAT. The capacity fee (€/kW per month) and monthly fees are not included in this price.
Electricity markets
- Day-ahead market (DA)
- An electricity exchange (e.g. Nord Pool) where the next day's electricity prices and volumes are set in an auction on the previous day. Prices are in 15-minute intervals from 1 October 2025.
- Intraday market (ID)
- An electricity exchange where trading takes place continuously after the day-ahead auction closes until shortly before delivery.
Reserve markets
- FCR
- Frequency Containment Reserve: capacity that responds automatically to deviations in grid frequency and stops the frequency change. Full activation within 30 seconds.Source: Harmonised Principles for Baltic LFC Reserve Prequalification, section 4.2.1
- aFRR
- automatic Frequency Restoration Reserve: capacity controlled by the TSO with an automatic signal to restore frequency after a disturbance. Full activation within 5 minutes. Payment is made for availability (€/MW/h) and for activated energy (€/MWh).Source: Harmonised Principles for Baltic LFC Reserve Prequalification, section 5.3.1
- mFRR
- manual Frequency Restoration Reserve: capacity activated by the TSO on instruction to cover larger imbalances. Full activation within 12.5 minutes. Payment is made for availability and for activated energy.Source: Harmonised Principles for Baltic LFC Reserve Prequalification, section 5.7.1
- Clean Horizon Storage Index
- An index published monthly by Clean Horizon: the estimated annual gross revenue of a battery storage system (k€ per megawatt) on the Estonian day-ahead, intraday and reserve markets, for 1-, 2- and 4-hour batteries. Index assumptions: RTE of 85% at the connection point, energy use limited to 1.5 cycles per day, 100% availability.
Financial metrics
- EBITDA
- Earnings Before Interest, Taxes, Depreciation and Amortisation: revenue minus operating costs, i.e. the money the project earns from operations each year.
- NPV
- Net Present Value: the sum of all future cash flows in today's value (discounted at the report's discount rate) minus the investment. A positive NPV means the project's return exceeds the discount rate.
- IRR
- Internal Rate of Return: the annual return, as a percentage, at which the NPV is zero. If the IRR is higher than the discount rate, the NPV is positive.