Grid-scale battery energy storage in the Australian NEM earned an average of $148k per MW in 2024. This marked a 45% increase from the low reached in 2023. But behind that topline number is a more complex story, with a few strong performers significantly outperforming the average. Let’s look at which batteries delivered strong returns and why in Modo Energy’s 2024 BESS revenue recap.
In this article, we refer to the Modo Energy NEM battery index, which represents the average revenues (inclusive of marginal loss factors) earned by batteries within the NEM across a period of time. The average is weighted and normalised by a battery’s rated power. All currency figures quoted are in Australian dollars (AUD).
The index and this article cover merchant revenues, defined as revenues from the NEM’s publicly traded wholesale energy and FCAS markets. Batteries may have other revenue sources, such as government contracts and power purchasing agreements.
NEM battery revenues recovered in 2024 through increased earnings from energy trading
The $148k/MW of average battery energy storage earnings in 2024 represents a 45% increase from 2023. This was despite revenues from frequency response services (known as FCAS) dropping, continuing a trend seen for the past several years. Energy trading revenues more than doubled to $102k/MW from 2023 to 2024, which more than offset the reduced FCAS revenues.
Revenues from energy reached their highest-ever level, 29% more than the previous high in 2022. This was due mostly to an increase in the number of extremely high prices, leading to higher price spreads. The price spread captured by batteries in 2024 was 72 percent higher than in 2023.
Overall, 50% of the net revenues earned by batteries trading energy came by selling power when prices exceeded $3,000/MWh.
FCAS revenues decreased from 2023 due to a collapse in value obtained from regulation FCAS. Contingency FCAS revenues actually increased slightly due to batteries providing contingency FCAS services at very high prices. However, contingency revenues remain well below levels seen before 2023.
Individual battery energy storage revenues significantly differed from the NEM average
While the average revenues earned in 2024 by batteries in the NEM were $148k/MW, the returns for individual assets varied significantly from this. The top-earning battery, Bouldercombe in Queensland, earned $336k/MW over the year, 227% of the average. On the other hand, Ballarat BESS in Victoria earned only $48k/MW, 33% of the average.
Multiple regions had battery energy storage systems with revenues exceeding the index average. Of the five top-performing batteries, two are in Queensland (Bouldercombe and Wandoan South), two in New South Wales (Wallgrove and Riverina 1), and one in South Australia (Lake Bonney).
However, these systems are also all longer in duration than average. Bouldercombe, Lake Bonney and Riverina 1 are two-hour systems, while Wallgrove and Wandoan South are 1.5 hours in duration. In general, the longer a battery’s duration, the higher its revenues in 2024.
However, all batteries in Victoria underperformed the index, even longer duration batteries such as Bulgana and Gannawarra. The highest-performing battery energy storage system in the state - the 1.7-hour Bulgana - earned $143k/MW, slightly below the index average.
This is because Victoria saw fewer instances of extreme pricing than the other regions. In all of 2024, Victoria had 7.5 hours of energy prices above $3,000/MWh, compared to 15 in Queensland and 25 hours in New South Wales.
With half of all battery energy revenues coming during these periods, this lowered the potential value batteries in Victoria could earn.
Battery revenues in the NEM are dominated by extreme pricing events
The importance of extreme price events in battery revenues means that revenues in 2024 were skewed towards just a handful of days: 50% of revenues came from just 32 days.
On one particular day, batteries in the NEM earned 11% of their 2024 revenues: 5 August. That day, energy prices were very high in all mainland regions of the NEM. This was due to low coal availability, and low wind and solar output.
On this day, batteries earned the equivalent of an annualized $5.1 million/MW/yr trading energy. Batteries earned an additional $0.9 million/MW/yr from FCAS, as prices also rose in contingency markets.
Extremely high prices in FCAS services, and contingency in particular, also occurred on other days. But this tended to be isolated to a single region, allowing batteries in that region to outperform.
For instance, Queensland alone had extremely high FCAS contingency prices on 11 October. Prices in the 60-second and 5-minute raise contingency markets in the state spiked to over $14,000/MW/hr. In other states however, FCAS prices reached only as high as $56/MW/hr.
Bouldercombe and Wandoan South were able to provide FCAS contingency at those prices and receive significant upside revenue. That helped them become the first and fifth highest-earning batteries in 2024, respectively.
While battery energy storage systems in Victoria performed exceptionally well on 5 August, that was the last time in 2024 that the region saw prices over $3,000/MWh. Despite having over 30% of the NEM’s active battery capacity, systems in the state accounted for just 6% of the revenue earned on the following nine highest-value days in 2024.
Energy trading revenues have become dominant but contingency FCAS still provides upside potential
Overall, providing energy and FCAS services when prices spike remains very important for batteries throughout the NEM. All but two batteries outperforming the index earned over 50% of revenues during periods when energy or FCAS prices exceeded $3,000/MWh. Even those two batteries—Lake Bonney and Wandoan South—received over 40% of revenues from prices over that level.
Notably, even though battery energy storage in the NEM now earn a minority of their revenue from FCAS, there was upside potential from providing contingency FCAS during volatile periods. For Bouldercombe, the additional value captured from FCAS during these extreme-price periods led to it outperforming the next-best-performing batteries. The $125k/MW/year it earned from contingency FCAS was 25% more than what batteries earned on average in 2023.
In conclusion, 2024 tells us that energy is now the dominant revenue driver for battery energy storage in the NEM, accounting for 69% of average revenues. However, FCAS remains important, especially during the infrequent occasions when prices spike within an individual region. Capturing this value (if it occurs) can help a battery outperform all others in the market.
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