Decision Support for Battery Energy Storage Systems in an Evolving Flexibility Market : A Study of Market Dynamics, Value Propositions, and Strategic Opportunities in the Swedish Energy System

Sammanfattning

Purpose – The aim of this study is to examine how energy providers can strategically utilize battery energy storage systems (BESS), across multiple market applications under uncertain and evolving conditions in the Swedish electricity market. In doing so, the study develops a decision-support framework that connects key challenges, value propositions, and strategic opportunities for BESS utilization. Method – To answer the research questions, a thematic analysis was conducted based on data collected through semi-structured interviews. In total, 20 interviews were held with industry experts, the case company, and other actors in the energy sector to get a better understanding of the sector. Findings – The analysis identified four central challenge areas affecting BESS utilization: market uncertainty, lack of transparency, technical limitations, and regulatory barriers. These challenges explain why many BESS applications remain narrow and create a need for strategies that go beyond reliance on a single revenue stream. Based on the empirical findings, four main strategic approaches were identified: multi-market optimization, value stacking and contracts, strategic siting, and resilience and service models. Theoretical contribution – This study contributes to existing literature by connecting BESS utilization with strategic decision-making under uncertainty. While previous research has discussed flexibility markets, value stacking, and battery storage separately, this study combines these perspectives through a contingency framework providing a strategic framework for future use. Practical implications – This study provides energy providers and other BESS actors with a structured framework for evaluating how battery assets can be positioned across different market opportunities. The findings highlight the importance of combining multiple revenue streams, selecting suitable locations, managing technical limitations, and preparing for future regulatory and market changes. The framework can therefore support more informed investment and operational decisions in an evolving flexibility market. Keywords: Battery Energy Storage Systems (BESS); Energy Market; Flexibility Market; Multi-Market Strategy.