Short Definition

Virtual cycling refers to trading activities in BESS markets in which electricity positions for the same delivery period are bought, sold or closed out. These positions can offset each other before physical delivery. Therefore, not every virtual cycle results in the battery energy storage system (BESS) actually being charged or discharged.

Virtual Cycling at a Glance

• Virtual cycles result from offsetting trades for the same electricity delivery period.
• A trader or optimizer can modify or completely reverse a planned charge or discharge before delivery.
• Only the net position remaining after trading has concluded is physically implemented through the final BESS schedule.
• Purely virtual cycles do not change the state of charge and therefore do not directly cause storage losses or battery degradation.

How Does Virtual Cycling Work?

Virtual cycling occurs primarily in continuous intraday trading. In these markets, electricity products for specific delivery periods can be traded until shortly before physical delivery. Prices change continuously during this period. A trader or optimization algorithm can therefore close an existing position through an offsetting transaction and subsequently open a new position.

A simplified example illustrates the process: A market participant initially buys 1 MWh of electricity for a specific delivery period at EUR 60/MWh. This position schedules the BESS to charge during the relevant period. If the price rises to EUR 90/MWh before delivery, the same amount of energy can be sold again. The purchase and sale offset each other in terms of volume. No charging schedule remains, the BESS is not physically charged and the price difference represents the economic result of this virtual cycle before trading costs.

If the price subsequently falls again, a new buying position can be opened for the same delivery period. If this position is not closed through another transaction before trading ends, it becomes part of the final schedule and results in the BESS actually being charged.

Trading algorithms can continuously evaluate the order book, current prices, price forecasts and existing positions. Based on this information, they open, modify or close positions. Before physical implementation, all transactions must be consolidated. The operation of the BESS is determined not by the number of intermediate trades but by the final schedule or remaining net position.

Where Is Virtual Cycling Used?

Virtual cycling is mainly used for the short-term market optimization of BESS assets. It allows price changes within the trading window of a delivery product to be used multiple times without physically implementing every adjustment to the trading schedule.

Another application is the continuous adjustment of schedules in response to updated forecasts. If expected market prices, available storage capacity or other market conditions change, an originally planned charge or discharge can be corrected before delivery.

Virtual cycling can also form part of a broader multi-market strategy. In this case, trading positions must be coordinated with other commitments and the BESS’s actual available operating range.

Benefits, Limitations and Technical Requirements

Virtual cycling expands the trading opportunities available to a BESS because price movements can be used without every intermediate position resulting in a physical energy flow. Purely virtual transactions therefore cause no immediate efficiency losses or additional physical battery degradation.

However, the strategy involves trading risks. Market prices may develop differently from the forecast. Low liquidity, bid-ask spreads, transaction costs or trading deadlines may also prevent a position from being closed at the desired time and price. If a position remains open, it must be fulfilled or otherwise balanced in accordance with the applicable market processes.

The final schedule must be compatible with the actual state of charge (SoC), available energy, charging and discharging power, and grid connection limits. Capacity or power already reserved for other applications must also be considered. Implementation therefore requires reliable plant measurements, current operating data, suitable market interfaces and consistent coordination between trading and asset operation.

Virtual Trading Cycle vs. Physical Battery Cycle

A virtual cycle is not a physical battery cycle. It describes offsetting electricity purchases and sales that can fully or partially cancel each other before the delivery period.

A physical battery cycle, by contrast, results from actual energy throughput in the BESS. Only real charging and discharging processes change the SoC, cause conversion losses and contribute to cycle-related battery degradation. Virtual trading cycles must therefore not be counted as full cycles in the BESS’s technical cycle count.

How Can EcoPhi Technically Support Virtual Cycling?

Virtual cycling generally takes place within the trading and optimization systems of an electricity trader, aggregator or specialized market optimizer. EcoPhi is not an electricity trader or market service provider.

On a project-specific basis, EcoPhi can support the technical connection between a BESS and an external market optimization system. This can include processing final schedules or external power setpoints, monitoring the SoC and available power, and implementing the resulting charging and discharging commands. The available functionality depends on the device, market and communication interfaces as well as the requirements of the individual project.

Short Summary

Virtual cycling uses electricity price changes through repeated purchases and sales for the same delivery period. If these positions offset each other, no physical battery cycle occurs. Only the final schedule affects the SoC, storage losses and degradation of the BESS.

Frequently Asked Questions

What is a virtual cycle?

A virtual cycle is a pair or sequence of offsetting electricity trades for the same delivery period. If the positions fully offset each other, the BESS is not physically charged or discharged.

Does virtual cycling affect the battery?

A fully closed-out trading cycle does not directly affect the battery because no physical energy flow occurs. Only physically executed charging and discharging processes affect efficiency and degradation.

What happens to trading positions before delivery?

Open positions are consolidated. The remaining net position forms the basis of the final schedule and must remain within the BESS’s actual operating limits.

Who performs virtual cycling?

Virtual cycling is typically performed by electricity traders, aggregators or specialized market optimizers. A local EMS can subsequently process the resulting schedule or the setpoints derived from it.