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.
Wind penetration has a positive relationship with the utilization of batteries. Plotting the total dispatch rate for bids and offers against wind penetration shows the link between these two figures. The daily dispatch rate in April and May increased on average for both Bids and Offers as wind penetration rose.
As the average wind penetration reduced in May, average Bid and Offer dispatch rates fell from 7.8% and 4.8% in April to 5.8% and 4.4% in May.
High wind penetration means batteries' primary competition - CCGTs - are online less
High wind penetration results in lower CCGT generation, with some units going fully offline. This means there is less flexible generation online to compete with batteries in the Balancing Mechanism.
Plotting CCGT generation as a proportion of overall demand versus battery dispatch rates reveals the inverse of the trend visible with wind.
The relationship between wind and CCGT generation levels and battery dispatch rates does have exceptions however. These become more noticeable at a regional level.
Increased wind results in Bid dispatch rate above 20% for batteries in northern Scotland
Wind penetration and average Offer dispatch rates are positively correlated, but this is not always the case for Bids. As wind penetration increased beyond 50% in April and May, Bid dispatch rates decreased on average.
This reflects a reduced need for Bids from all batteries at these times. Transmission constraints limit the power that can flow south from north Scotland, where lots of wind generation is located. During these times the control room needs increases in power, via Offers, south of constraints in Scotland.
But the inverse is true in Scotland. Bid rates increased more steeply with wind penetration for batteries in North Scotland than anywhere else. These batteries were used to import energy, alleviating transmission constraints. Offer dispatch rates for these same systems reduced towards zero as wind penetration increased.
As a result, batteries in North Scotland received the highest dispatch rate for Bids and one of the lowest for Offers.
However, Bid dispatch rates were also higher than Offer dispatch rates In 11 out of 13 GSP groups. This is down to how this figure is calculated and differences in availability.
Bid dispatch rates were higher than Offer rates due to increased Offer availability
Dispatch rates depend on dispatched volume and available volume. Bid and Offer availability is mostly determined by the amount of energy a battery has at any point in time. Frequency response contracts also affect availability, as a system should declare any contracted volume unavailable in the Balancing Mechanism.
On average, batteries export energy quickly during demand peaks and charge more slowly in between. The 12-hour gap between evening and morning peaks meant batteries spent more time on average at a higher state of charge in April and May.
This resulted in 28% more Offer availability than Bid availability on average in April and May. With dispatched Offer volumes only 15% higher than Bid volumes, Bid dispatch rates were higher.
High wind days present opportunities for batteries in the North and South
Battery operators have taken advantage of high wind generation in both the North and South of Great Britain. On April 15th, wind generation averaged 14 GW, the highest in 2024.
The highest-earning system that day was Clay Tye, located in East England. It also provided some of the highest Offer availability of all systems. Due to the high winds on this day, and its location, Clay Tye benefited from an Offer dispatch rate of 22%, helping it generate £110k/MW/year from the Balancing Mechanism alone.
Jamesfield 1, located in Northern Scotland, was the 5th highest-earning battery on April 15th, generating £130k/MW/year. It provided more Bid volume than any other battery, 95% of which was used to manage constraints. This meant it earned up to £83/MWh from Bids, allowing it to earn revenue while importing energy. This energy was then sold on the wholesale market.
This is an example of the opportunities presented to batteries available in the Balancing Mechanism on high wind days.