Pricing
27 Jun 2024
Zach Jennings

Balancing Mechanism: What impacts the dispatch rate for BESS?

Dispatched battery volume in the Balancing Mechanism fell by 12% in May, averaging 2.1 GWh daily. This led to Balancing Mechanism revenue for battery energy storage decreasing by £1k/MW/year. Dispatched volumes depend on the dispatch rate, but what factors drive this, and why does battery location matter?

There are different ways to measure battery utilization in the Balancing Mechanism

Before we look into why dispatched volumes were reduced, let's examine how we can measure this and how these measures differ.

Total dispatch volume

  • The total volume of Bids and Offers dispatched to batteries in the Balancing Mechanism.
  • This provides an indication of what the ESO needed to balance the system and how much it is physically capable of dispatching using the tools it has available.
  • It does not reflect total battery availability.

Total dispatch rate

  • This measures total battery Bid and Offer dispatched volumes as a proportion of total availability.
  • Total availability is defined as Bid and Offer volume priced below ¬£999/MWh
  • It represents the volume batteries can expect to be dispatched per MW they make available.
  • It does not include context on how batteries were priced against competition.

In-merit dispatch rate

  • Measures Bid and Offer dispatched volumes for batteries as a proportion of availability priced cheaper than the most expensive action taken.
  • This tells us how well the control room utilized competitively priced batteries - essentially the inverse of a skip rate.
  • Changing pricing behaviors can skew the figure - like in May.

For this article, we will use the total dispatch rate to analyze trends in battery utilization in the Balancing Mechanism. This reduced from 6% in April to 5% in May.

Reduced wind generation in May drove the fall in the total dispatch rate

The biggest change in average system conditions between April and May was a reduction in wind generation. Measured as a proportion of demand (also known as "wind penetration"), it halved month to month. Wind penetration averaged 36% in April, boosted by periods of high wind in mid-April, as GB broke its low carbon intensity record twice. This figure fell to 18% in May.

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