Pricing
03 Aug 2023
Shaniyaa Holness-Mckenzie

Balancing Mechanism skip rates: batteries vs. other technologies

Earlier this week, we explored the “skip rates” of battery energy storage in the Balancing Mechanism. (Plus and Enterprise users can check out the Deep Dive, and everyone else can see the Quick Take version.) In 2023 so far, just 3% of in-merit, available battery capacity has been activated.

Shaniyaa explores how battery skip rates compare with other tech types.

But how does this compare to other technology types? Are batteries actually less likely to be dispatched? Or is battery skip rate roughly in-line with the average?

In June, batteries had a higher proportion of in-merit capacity than all other technology types

Across the entire month of June, nearly 60% of all battery energy storage Bid and Offer volume in the Balancing Mechanism was “in merit”. “In merit” means that the Bid or Offer was cheaper than the most expensive action - and should, in theory, have been taken.

Of all technology types in the Balancing Mechanism, batteries priced themselves “best” - in theory, this gave them a better chance of being activated than any other asset class.

Wind had a relatively low level of in-merit capacity. Most available wind volume in the Balancing Mechanism comes from Bids - which means turning down. These bids are priced to cancel out the money they would lose from their subsidies (for non-delivery) - which makes them some of the most expensive Bids in the stack, and therefore out of merit.

Traditional, fuel-burning generators were more likely to be dispatched in June

Of that available, in-merit capacity, what proportion actually got dispatched in June?

Just 4% of in-merit, available battery energy storage Bid and Offer volume (in June) actually got dispatched. (This is up from the overall average across 2023 so far - 3%.)

  • At the other end of the spectrum, 25% of all in-merit, available biomass Bid and Offer volume was dispatched.
  • However, 85% of this was Bid volume - essentially, biomass is being instructed to turn down, for the most part.

In June, the average skip rate of all technology types in the Balancing Mechanism was 76%

“Skip rate” refers to how often assets or technology types get skipped in the Balancing Mechanism - and, ultimately, there’s more than one way to define it.

Here, we look at “skip rate” as a measure of the actual number of non-dispatches (rather than as a percentage of available capacity). And, in general, clean technology types (including batteries) get skipped more often than traditional, fuel-burning technologies.

Big changes are needed for the Balancing Mechanism to work for batteries - and consumers

Last week’s open letter from the Energy Storage Network to National Grid ESO did a great job of highlighting some of the problems with the ways batteries are treated in the Balancing Mechanism. You can also read the ESO’s response here.

The measures being put in place to address the issues with battery dispatch include the new Open Balancing Platform - which will launch in December 2023. This should increase the likelihood of batteries being dispatched.