Pricing

10 Jul 2024
Shaniyaa Holness-Mckenzie

The buildout report: Will Q2 be the final quarterly low of 2024?

Q2 of 2024 saw the lowest quarterly buildout since 2022. 136 MW of new-build battery energy storage began commercial operations in Great Britain.

This brought the total rated power of battery systems in Great Britain to 4 GW. The new capacity, along with some upgrades to existing sites, brought the total energy capacity in Great Britain to 5.3 GWh.

Shaniyaa talks through the new battery capacity operational in Q2 2024

Main headlines from Q2 2024:

  • 136 MW of new build capacity began commercial operations in Q2 2024, the lowest quarterly increase in almost two years
  • The new capacity came from four new battery energy storage systems
  • These systems ranged from 16 MW to 50 MW in rated power and one to two hours in duration
  • 1.4 GW of battery projects that are not yet operational hold Capacity Market contracts starting in October. 1.1 GW is expected to be operational by the end of Q3.
  • However, we project that between 150 - 430 MW of new build capacity will actually become commercially operational in Q3.

Total buildout so far in 2024 is less than the lowest quarter in 2023

Total new capacity from the first half of 2024 was 320 MW - less than the lowest quarter of 2023.

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. 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.

In addition to the new power capacity from batteries beginning commercial operation in Q2, the total battery energy capacity also increased with upgrades to existing assets.

Gresham House completed the augmentation of three of its sites. In April, the fund converted its 35 MW Arbroath site to 1.4 hours, up from one hour. In June, it also augmented the two 50 MW sites, Enderby and West Didsbury. These sites increased from one-hour units to two-hours.

This means that the total rated power of batteries in Great Britain was 4 GW at the end of Q2 2024, and the total energy capacity was 5.3 GWh.

Four new batteries begin commercial operations in Q2 2024

Between April and June 2024, four units began commercial operations. This includes the first site from SSE - the 50 MW / 100 MWh Salisbury - as well as the first site from Atlantic Green - the 16 MW / 32 MWh Buxton.

Gerrards Cross also came online as Field’s second battery to begin commercial operations.

All of the newly built sites that began commercial operations are based in England.

85% of the new battery capacity in Q2 2024 came from sites with at least 1.5 hours of duration

The Salisbury (50 MW) and Buxton (16 MW) sites have a duration of two hours, while the 50 MW York site has a duration of 1.5 hours.

These new sites bring the average duration of batteries in Great Britain to 1.31 hours, up from 1.27 hours at the end of Q1 2024.

Duration could be impacting the operational strategies of the new assets from the buildout

  • Longer-duration batteries participated more in merchant markets, while shorter-duration more in frequency response.
  • Three out of four of these new batteries are already registered in the Balancing Mechanism, capitalizing on increasing opportunities here.

The two-hour units, Salisbury and Buxton, have so far generated most of their revenues through wholesale and the Balancing Mechanism.

York is a non-Balancing Mechanism registered unit. This means we have a limited view of its operational strategy. The site began earning some of its revenues through Dynamic Regulation High in April. Since then, the 1.5-hour unit is likely to have been wholesale trading.

On the other hand, the one-hour Gerrards Cross has generated 80% of its revenue through Dynamic Containment since May.

Dynamic Containment requires less cycling, and there is no revenue benefit from having a duration above one hour. On the other hand, Dynamic Regulation is a higher cycling service for one-hour units. Here, two-hour units can see the same revenues as a one-hour unit, from half the cycles.

Similarly, batteries with a higher duration get more value per MW in the Balancing Mechanism and wholesale trading, as these depend on energy.

The initial operating strategies of the newly operational batteries suggest they are being optimized for their duration, maximizing revenues while minimizing cycling.

Units 300MW and above make up 42% of the capacity delayed by over a year

25% of the capacity from units in the pipeline is delayed. If a battery did not come online in the quarter it was expected to, this is a delay. If a battery has an expected buildout date in the future, which is pushed out further, this is counted as a delay.

The methodology for how we quantify delays is explained at the end of this article.

Four battery units with a capacity of at least 300 MW each were expected to be operational by the end of Q2 2024. These batteries are not yet operational. The latest updates suggests that they will likely begin operations within the next two years.

These units make up 42% of the total volumes delayed by over a year.

Overall 70% of the capacity from units that are delayed, have been delayed for over a year.

While the proportion of delays lasting less than three months remained stable between Q1 and Q2, the amount of capacity delayed increased. At the end of Q1, 371 MW of capacity was delayed by up to three months, and at the end of Q2, this had increased to 448 MW.

In recent months, battery providers have attributed shorter-term delays to connection delays at the DNO level, commissioning testing, and equipment issues.

Providers have pushed 80% of the capacity expected in Q2 2024 to Q3 and beyond

709 MW of capacity from units in the pipeline was expected to begin commercial operations in Q2 2024. However, based on historic buildout rates, between 160 - 513 MW was projected to come online. At 136 MW, the buildout in Q2 2024 was even lower than the low-buildout scenario. 80% of the capacity has been pushed into future quarters.

Of the 709 MW that was expected, 283 MW is now expected in Q3 2024, with the remaining 290 MW coming later.

This takes the total capacity of new units expected to reach commercial operation in Q3 to 1.6 GW.

Q3 marks a significant milestone for battery buildout

The 2024/25 Capacity Market year will begin in October. Capacity Market revenues have contributed 30% of battery revenues since December 2023. 1.4 GW of non-operational sites hold Capacity Market contracts for 2024/25. Of this, 1.1 GW is expected to come online in Q3.

We project that between 150 and 430 MW of new-build battery capacity will actually begin commercial operation in Q3: just 26% of the pipeline.

Following the buildout seen in Q2, total rated power is set to reach 4.6 GW based on the base case projection. This is just 200 MW higher than our projected low-buildout scenario.

Despite the low increase in operational capacity in Q2, many units achieved commissioning or energisation within the quarter. For example DIF/ib vogt’s Sundon, Gresham House’s Penwortham, and Lightsource BP’s Tiln. We could expect to see these sites operating in markets before the end of the year.

Looking further ahead, a number of large projects were also announced in the quarter:

  • 1 GW / 4 GWh Teesworks battery in partnership with NatPower
  • 290 MW / 1740 MWh battery in Devon from Statera
  • 500 MW Culham from Statera
  • 300 MW / 600 MWh Hornsea (co-located with wind) from Orsted
  • 200 MW / 400 MWh Harker battery from Recurrent Energy

These projects can be expected in the next few years following planning permission and grid connection agreements.

How do we quantify delays?

Modo Energy has provided our best view of delays in the pipeline.

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 will be distributed into future quarters based on the projection methodology.


GB BESS Index

Modo asset database

Modo Energy battery energy storage pipeline (inclusive of Capacity Market batteries) is available below.

Download

Modo_Energy_Battery_Pipeline_Q3_2024_-_Q3_2027.xlsx

To continue reading this article you need a Benchmarking Pro GB subscription