The first Quick Reserve auction took place on December 3rd 2024, and batteries provided 95% of the service. Quick Reserve is the second service that aims to procure firm reserve in advance that NESO launched in 2024. This follows the launch of Balancing Reserve in March 2024.
Here’s what did the first day of the new service meant for batteries in Great Britain.
Batteries provided 95% of accepted Quick Reserve volume
A key difference between Quick Reserve and Balancing Reserve is that Quick Reserve involves much faster ramp times - making it highly suited for batteries. This may have pushed batteries' main competition for Balancing Reserve—gas-fired generators—out of the picture for Quick Reserve.
36 batteries participated in the first Quick Reserve auction and secured 95% of all accepted volume.
While batteries have dominated the first day of delivery, other technologies could begin to enter the service later. In Balancing Reserve, gas-fired generators sat out the first auction but went on to provide the majority of the volume later. They provided just 12% of the accepted volume on day one before providing 55% in the week following. However, given the service requirements for Quick Reserve, this is less likely to be repeated here.
Volatile prices reached the price cap in both services
Clearing prices were volatile - ranging from £0 to £26.63/MW/h. Prices averaged £10.91/MW/h in the positive service, while negative prices averaged £6.32/MW/h.
Both services hit NESO’s price caps - prices in the negative service were capped at £5.71/MW/h throughout much of the day, rising during off-peak hours. Meanwhile, price caps in the positive service were highest during demand peaks and were reached during the evening.
Price caps and dynamic requirement volumes limited the accepted volume
Initial requirement volumes were set at 500 MW and 300 MW for Positive and Negative Quick Reserve, respectively. However, similar to Balancing Reserve, these requirements are dynamic and can change throughout the day. For the negative service, requirement volumes stayed at 300 MW all day, but the price caps resulted in as little as 40 MW procured during peak demand periods.
Positive Quick Reserve saw a dynamic volume requirement, which was lowered to 300 MW in the early morning of December 4th. This demonstrates that NESO needs less positive reserve when demand is expected to be low. During the evening, price caps meant procured volume was just 200 MW - less than half the requirement volume.
Tesla secured 40% of all Quick Reserve
Tesla secured the highest volume of contracts for their batteries. On average, Tesla batteries were contracted for over 200 MW of the new service every settlement period, and bid for over 1 GW. However, not all of this was mutually exclusive, meaning it could not all be accepted.
EDF provided the second-highest volume of the service. EDF and Tesla were both also the largest providers of Balancing Reserve in the first week following its launch in March 2024.
Early-moving batteries earned revenues up to £50k/MW/year
Overall, Quick Reserve accounted for 6% of total battery revenue on December 4th. Some early-moving batteries secured high revenues from the new market. Battery@Ray earned £149k/MW/year, generating 63% of its total revenue from Quick Reserve.
If Quick Reserve remains dominated by batteries and requirement volumes rise throughout winter, we may continue to see some high prices in the service. However, if the service mirrors Balancing Reserve, gas-fired peaking plants may come in and reduce battery participation. Balancing Reserve has made up 3% of battery revenues since its launch.