It’s been ten weeks since the launch of Balancing Reserve on March 12th. This is the first reserve service to have widespread participation from batteries. In May, two batteries used the service to top the one-hour and two-hour leaderboards.
In this article, we’ll show how the market’s evolving and how it is proving valuable for batteries.
Clearing prices have fallen on average, but can spike above £10/MWh
Positive Balancing Reserve prices have reduced since the first week. Record negative power prices in April led to decreased clearing prices, which remained below £10/MW/h from March 22nd to April 22nd. Despite price highs increasing in May, monthly average prices have fallen each month, from £3.60/MW/h in March to £2.60/MW/h in May.
Negative Balancing Reserve prices remain capped at £1.54/MW/h. Participation has increased in May, following almost 500 hours with 0 MW contracted in April.
Batteries split volume in the service with gas peakers
Batteries continue to compete with gas peakers to provide the service. On average, batteries have provided 41% of all Positive Balancing Reserve volume, and this figure has stayed consistent each month since the service launched.
Since April 12th, the total accepted volume in the positive service has reduced from 420 MW to 330 MW. This has happened despite the ESO maintaining a requirement volume of 400 MW.
Negative Balancing Reserve volume remains low. The low price cap means just 24 MW is typically purchased, often provided by just one battery. This figure increases when a large CCGT unit makes itself available for the service below £1.54/MW/h.
Benchmarking Pro GB subscribers can continue reading to find out:
- How clearing prices in the service are being set, and why this helps batteries.
- How the top-earning one and two-hour systems used the service to outperform the GB BESS Index.
- Have the ESO withheld payments for units that don’t deliver the service correctly?
Gas peakers setting clearing prices provides an opportunity for batteries
The volume of batteries receiving Balancing Reserve contracts depends on gas peaker bid prices. While battery bid prices remain flat, gas peakers vary their bids depending on wholesale prices, increasing them during peak periods. This means contracted battery volume increases during these periods, and these systems receive an uplift in revenue.Batteries provide 51% of Positive Balancing Reserve volume during peak periods07:00 - 09:00 and 17:00 - 19:00), compared to 39% outside these times. Battery bids are often outpriced by peakers during weekends, with one 90 MW gas peaker offering reserve for £0.05/MW/h in every settlement period on Saturdays and Sundays, dampening clearing prices.