Poor commercial and technology decisions could undermine the promise of co-located projects

Coordinating the operation of BESS alongside co-located renewables assets is difficult. Getting the commercial structures right – and deploying the appropriate technology – is therefore a crucial part of a co-location strategy. If these elements are poorly executed, the consequences can be significant. At worst, they create real system inefficiencies (with those costs ultimately borne by the consumer). At best, they simply reduce the overall performance of the site.

Early projects are offering valuable lessons for asset owners and developers, giving them a chance to refine their approaches. In our conversations with hybrid project stakeholders, two key questions are consistently emerging:

1. What is the right optimisation strategy for co-located sites?
2. How do you optimally operate co-located sites around contested grid connections?

When optimisation isn’t aligned

Many co-located projects today are structured as two independent assets rather than a single integrated system. This is particularly common in retrofit scenarios, where a battery is added to an existing wind or solar site. The generation asset is usually governed by long-term agreements such as PPAs or CfDs, and the battery is often layered on top, optimised for short-term trading and flexibility revenues.

This strategy is rational, but it can create tension, especially in constrained grid environments where co-located assets share a single grid connection and export capacity is finite. Under this strategy, decisions about capacity allocation can be contested during periods of high renewables generation, and the commercial structures can often govern the outcome.

An example Arenko saw at one hybrid site was where the renewable generation asset was being curtailed to accommodate battery operation. In this case, the analysis showed that instantaneous curtailment reached between 32% – 38%. While it is not possible to quantify the exact volume of energy lost, since it represents generation that never occurred, it nonetheless reflects real, foregone renewable output.

Under these strategies, where separate entities manage the renewables generation and storage assets, and in this case with the battery being prioritised, compensation mechanisms can also be triggered when one asset impacts the other’s revenue. This reflects both system-level and operational inefficiencies.

This ‘Conway’s Law’ – where systems mirror the communication structures of the organisations that build them – leads to a fragmented approach to hybrid asset management where decisions are made in isolation based on asset, departmental or individual organisational goals instead of considering whole-site performance.

The answer is well aligned incentives and clear responsibilities, which is even more important when relying on specialist third-party optimisers. If these don’t exist, no amount of technology will be able to solve inefficiencies that are baked into the system.

The role of a ‘digital backbone’

On the assumption that whole-site optimisation has been enabled via the commercial structures in place, the next challenge to address is a technological one.

The fragmentation between the different assets is reinforced by disconnected technology stacks, inconsistent data, and multiple ‘sources of truth,’ limiting operational performance across both assets and how they work together. These dynamics are not inherent to co-location – they are the result of how the systems are structured and the technology that connects them.

This is where a strong ‘digital backbone’ becomes essential.

Owners and operators of complex hybrid assets require a unified data layer across forecasting, optimisation, trading, and asset control – bringing together all parts of the system into a single, coherent framework. Rather than relying on multiple ‘sources of truth,’ bringing all of this into one platform enables consistent, real-time decision-making based on a complete view of the whole site’s performance.

Figure 1: Arenko’s Nimbus platform provides a unified view of co-located wind and BESS assets. The red line tracks total scheduled power, optimised across Wholesale, BM, and DR HF markets while adhering to real-time grid power limits. It visualises how different revenue streams and physical constraints are balanced over a 24-hour period.

With this in place, decisions about whether to export renewable energy, store it, or trade it across markets, can be made dynamically – based on prices, forecasts, and system conditions – while optimising for whole-site value rather than individual asset performance.

In this sense, integrated software platforms like Arenko’s Nimbus will be critical for aligning optimisation and incentives in practice.

What ‘good’ co-location looks like

Encouragingly, we’re now seeing a shift in mindset among our clients toward whole-site optimisation, where co-located assets are optimised as a single system and constraints can be actively managed rather than contested.

At a UK solar site co-located with BESS, our Nimbus platform increased grid connection utilisation from 8% to 29%, with export availability around 83%. Coordinating battery storage with predictable daytime generation peaks allows the system to capture value that would otherwise be lost under fragmented optimisation strategies.

Similar patterns are emerging across wind and battery co-location, where coordinated optimisation can reduce unnecessary curtailment and improve overall revenue capture. The most effective approach we’ve seen is to have a single party responsible for end-to-end optimisation, and failing that, highly integrated (ideally one) digital platforms that operate across the site.

At a minimum, ‘good’ co-location means:

• Aligning incentives across generation and storage
• Structuring contracts to prioritise whole-site performance
• Ensuring that there is a coherent and integrated digital strategy that operates across all assets

Ultimately, developers and owners entering the co-location space must design commercial and technology structures from a whole-system perspective, rather than optimising each asset independently.

Really positive signs — with room for improvement

Co-located projects are already delivering significant value – increasing grid connection utilisation, unlocking new revenue streams, and supporting system flexibility. In many cases, projects are meeting or exceeding investment expectations.

However, as the market matures, the next phase of hybrid deployment will be defined less by hardware and more by commercial, operational, and organisational integration.

For asset owners, developers, and investors, our message is simple: develop a commercial and technology strategy that is based on whole-site optimisation. This is what will determine whether hybrid projects simply function or deliver on their full potential.

Future articles in this series will build on these themes, examining why co-located PV and storage is emerging as the only truly dispatchable renewables configuration, and how evolving policy frameworks, real-time data integration, and automation are reshaping optimisation strategies and whole-site performance.

Daniel Moore-Oats is Director of Product at renewables optimisation services company Arenko.