In Quarter 4 of 2023, 420 MW of new battery energy storage capacity became commercially operational in Great Britain. This represents a 13% increase in capacity from Q3, and took total grid-scale battery energy storage capacity in Great Britain to 3.5 GW and 4.6 GWh at the end of 2023.
- New Operational Sites: Eight new sites started operation. This included two large 99 MW projects by Harmony Energy Income Trust and Sosteneo Fund.
- Dominance of Two-Hour Systems: Six of the batteries, representing 64% of the new capacity, had a two-hour duration. This pushes the average duration of battery storage in Great Britain to 1.3 hours.
- Project Delays: Projects continued to face delays due to EPC company closures and grid connection issues. Whilst these issues are slowly being overcome, almost 1GW of expected capacity has been pushed to 2024.
- 2024 Q1 Outlook: 850 MW of capacity is due in Q1 2024. However, based on historic buildout rates, we expect to see between 400 and 600 MW of new capacity come online.
A record increase in battery energy storage capacity
Q4 was the largest-ever quarterly increase in operating battery capacity in Great Britain. This overtakes the previous record of 413 MW in Q2 2023. This means 1.5 GW of new capacity was added in 2023. This is also the biggest addition to battery capacity in Great Britain in one year.
Throughout this article, there will be references to the battery energy storage ‘pipeline’ and buildout ‘projections’.
- Pipeline: The list of assets expected to be built in Great Britain by 2026. Each of these has an expected quarter in which it will become commercially operational.
- Projection: A calculation of how much capacity will likely come online based on the rate of new capacity installed in previous quarters.
1.2 GW of capacity in the pipeline had expected operational dates in Q4, with a further 111 MW delayed from previous quarters. However, based on historic buildout rates, we projected that between 250 and 500 MW of this would actually become operational. The 420 MW that did come online is at the top of this range, but there is still a backlog of projects due to come online.
On average, 383 MW of battery energy storage capacity began commercial operation in each quarter of 2023. This is over twice the average of 2022, which was 166 MW per quarter.
Eight sites began commercial operation
Between October and December 2023, eight sites began commercial operation in Great Britain. A total of 36 batteries of 7MW or greater came online in 2023, with a total of 110 sites operational by the end of the year.
The largest new batteries were Harmony Energy Income Trust’s 99 MW Bumpers and the 99 MW Richborough Energy Park owned by Sosteneo Fund 1 HoldCo S.à .r.l.. These join the four other systems of around 100 MW operational in Great Britain: Statera’s Dollymans, Zenobe’s Capenhurst, Harmony Energy Income Trust’s Pillswood, and Harmony Energy/FRV’s Clay Tye.
Battery@Ray joins other batteries co-located with on-shore wind, Whitelee and Pen y Cymoedd. This brings the total capacity of battery energy storage co-located with wind to 92 MW. You can find out more about co-located batteries in our deep dive into Whitelee.
Two-hour systems dominated new additions in Q4 2023
64% (270 MW) of this new build capacity was from batteries with a duration of two hours. The second half of 2023 was dominated by the addition of new two-hour systems. 79% of new power capacity in Q3 also came from batteries with a two-hour duration.
The addition of these new two-hour assets increased the average duration of battery energy storage in Great Britain from 1.25 hours at the end of Q3 to 1.30 hours by the end of 2023.
Batteries in Great Britain have begun to shift heavily towards energy-based services, mostly through wholesale trading and the Balancing Mechanism. This shift is why we expect projects with at least a two-hour duration to continue to lead battery buildout.
Owners and operators still see value in the Balancing Mechanism
Industry concerns continue about the under-utilization of batteries in the Balancing Mechanism. Despite this, 330 MW of the 420 MW of new capacity is Balancing Mechanism-registered.
The revenue contribution from the Balancing Mechanism is growing. The Balancing Mechanism contributed 13% of battery revenues in Q4 2023, including 19% in December. In the other nine months of the year, it made up just 8% of battery revenues, going as low as 2% in February.
Owners and developers are still working through delays
Despite 2023 being the biggest year for battery energy storage buildout, many projects remain in the pipeline longer than originally expected. Many owners and developers faced delays in the buildout of battery projects in 2023. This followed the closing down of Engineering, Procurement, and Construction (EPC) companies, commissioning-equipment issues, and grid connection delays.
60% of delayed capacity is over nine months late
Our battery energy storage pipeline is mostly made up of assets with a Capacity Market Agreement for a delivery year beginning in 2022 - 2026, Pathfinder contracts, or similar. At the end of Q3 2023, the total battery energy storage pipeline was 9.0 GW. At the end of Q4 2023, this was 8.7 GW. On an asset-by-asset basis, the average length of delays in Q3 was 3.2 months, rising to 4.5 in Q4.
Most delays only become apparent as the expected operation date nears. Currently, 63% (1.9 GW) of delayed capacity is over nine months behind our initial expected date. 880 MW of capacity delayed beyond nine months is expected to begin commercial operation in 2024. It remains to be seen whether this capacity will materialize or whether long-term delays will continue to push projects later.
Some of the shorter delays are being worked through, however. Following the new capacity added in Q4 2023, the pipeline capacity with delays of under six months has halved. This suggests owners and developers are beginning to overcome shorter-term delays to bring their assets online.
In total, 270 MW of the 420 MW that came online in Q4 was from assets that had been expected to come online in Q4. The remaining 150 MW came from capacity delayed from previous quarters. Almost 1 GW of pipeline capacity did not materialize in Q4. 346 MW of this has been pushed into Q1 2024, and 593 MW is currently delayed beyond this.
These delays mean battery energy storage is still underdelivering in the Capacity Market
Many of the delayed assets have Capacity Market contracts that began in October 2023. 2.4 GW of new-build battery capacity won capacity market agreements for the T-1 Capacity Market for the delivery year 2023/24. 1.3 GW was built before October 2023, and a further 390 MW was built in Q4. This means 700 MW has yet to come online, equivalent to 146 MW of de-rated capacity. Of this, 373 MW is expected in Q1 2024, with the remainder delayed beyond this.
The outlook for new battery energy storage in 2024
There is now 850 MW of capacity in the pipeline for Q1 2024. Based on the buildout rate in 2023, we project that between 400 and 600 MW of this will come online. 270 MW of capacity has already been commissioned or energized in the second half of 2023, which suggests that these assets are likely to become commercially operational within Q1.
Based on historic buildout rates, we expect battery energy storage capacity in Great Britain to reach between 5.8 GW and 6.2 GW by the end of 2024. 2023 saw battery buildout records broken across the year, and these should be broken again in 2024.
How do we quantify delays?
Modo Energy has provided our best view of delays in the pipeline in Q3 and Q4 of 2023.
Many asset owners and developers will provide expected buildout dates through press releases, their website, social media posts, or word of mouth. This is used as the reference buildout date. Where this information is unavailable, the reference buildout date refers to the start date of any Capacity Market, Pathfinder, or similar contracts the asset has.
If this date arrives and the asset is not yet commercially operational, the delay is the number of months between the reference date and any updated buildout date from the asset owner/developer. Where an update is not given, an asset will be assumed to be delayed into the next quarter. Some assets may not materialize after one quarter from the reference date and have no new known buildout date. At the end of each quarter, these assets will be grouped, and the total capacity will be assumed to come online evenly across the next four quarters.