Wärtsilä has told the energy storage sector that rapidly changing revenue dynamics are reshaping how solar-plus-battery projects are designed, as income from ultra-fast contingency markets has all but vanished and energy arbitrage has taken centre stage.
From contingency payments to arbitrage
At a recent industry conference, Wärtsilä’s strategy lead explained that the historic rationale for choosing an AC-coupled architecture — access to the one-second FCAS (frequency control ancillary services) market — has substantially weakened. “
One of the key objectives of actually having AC coupling, and incurring that additional cost of AC, is to access the one-second FCAS market,”he said, before noting that FCAS has “completely collapsed” as a revenue driver in recent years. The result, the company and other delegates agreed, is that energy arbitrage (buying low, selling high) now dominates battery revenues.
For project developers and investors this represents a material change in the business case for storage. Where once the prospect of short-duration, high-value contingency payments could justify additional complexity and cost, today that premium has largely disappeared — shifting attention to how systems extract value through sustained arbitrage and ancillary services with different technical requirements.
Architecture versus control
Rather than commit to a single hardware architecture, Wärtsilä is advocating a software-centric approach that keeps options open. The firm builds a power plant controller (PPC) designed to sit above third-party power conversion systems (PCS), operating as a master controller irrespective of whether the underlying plant is AC- or DC-coupled. That, the company argues, allows asset operators to pursue multiple revenue strategies without being locked into one physical configuration.
Wärtsilä also highlighted a configuration under growing discussion: reverse DC coupling. In traditional DC-coupled hybrids the PCS sits on the solar side; reverse DC coupling places the PCS on the battery side so the storage can respond directly into fast-response markets. Wärtsilä’s spokesperson cautioned that inverter models are still being updated to support this arrangement, and that not all products on the market are yet compatible.
- AC coupling: historically chosen to access ultra-fast FCAS but incurs extra cost.
- DC coupling: conventional form places PCS on solar side; efficient for integrated charging/discharging.
- Reverse DC coupling: places PCS on battery side to permit direct battery response to rapid markets, but inverter support is in development.
Products and partners
Wärtsilä said it has implemented systems using DC blocks and has partnered with established PCS suppliers such as PE and SMA. Its PPC is deliberately hardware-agnostic so customers can select equipment that fits their asset strategy. The company’s newer Quantum Three platform, however, uses string inverters — an element the firm identifies as “the next problem for us to solve” should the market shift further toward reverse DC coupling.
| Feature | Wärtsilä position |
|---|---|
| PPC compatibility | Designed to sit over third-party PCS; hardware-agnostic |
| Inverter types | Uses DC blocks with PE/SMA; Quantum Three employs string inverters |
| Coupling focus | Flexible approach rather than fixed AC/DC architecture |
The message from Wärtsilä and other delegates was clear: as the composition of revenue streams evolves, so too will project designs. For operators and investors that means evaluating whether to bear the extra cost of AC coupling for niche contingency markets, or to favour cheaper, more efficient DC arrangements optimised for arbitrage.
Implications for prices, jobs and the grid
For consumers and policymakers the shift matters. A market where arbitrage is the chief revenue source incentivises batteries to cycle around price spreads, which can help smooth wholesale prices but may also lead to greater wear on assets and different maintenance regimes. For employers and installers, changes in inverter technology and control systems will determine the skillsets in demand: expertise in PPC integration and advanced inverter models will be more valuable than a one-size-fits-all hardware skillset.
Wärtsilä’s stance — pragmatic, software-led and partner-friendly — reflects a broader industry trend. As revenue drivers reconfigure, flexibility in control and the capacity to adapt to new market signals will probably count for more than allegiance to a single coupling philosophy.
