To go alongside the publication of our July 2022 Leaderboard, Neil and Imrith discuss battery energy storage system (BESS) trends and strategies from last month. In the video below, you can see which markets helped boost the BESS revenue stack in July. You’ll also be able to dive deeper into these revenues on an asset-by-asset basis.
Imrith and Neil discuss the July 2022 Leaderboard.
Leaderboard analysis
Fleet revenues
Figure 1 (below) shows the average fleet revenues for BESS assets in Great Britain (GB), from January 2020 to July 2022 (inclusive).
Average GB fleet revenues (Jan 20 - Jul 22)
In July 2022, average earnings (£/MW) for BESS assets decreased by 16.54% from the previous month - to an annualised revenue of £224,880/MW.
Asset revenues
Figure 2 (below) shows the revenues of assets on the Modo Leaderboard in July 2022 (excluding Capacity Market contracts).
Leaderboard asset revenues (Jun 22)
Asset strategies can be split into three categories:
Strictly participating in Firm Frequency Response (FFR).
Strictly participating in Dynamic frequency response services.
Participating in both Dynamic frequency response services and FFR.
Figure 3 (below) shows asset revenues for the different operational strategies taken in July 2022.
Figure 3 - Modo Leaderboard asset revenues categorised by operational strategy (July 2022).
Assets that strictly provided Dynamic frequency response services on average had the highest revenues (£23,064/MW), 14.3% lower than in June 2022.
The average revenue for the six BESS assets solely providing FFR was £10,243/MW - the lowest of all four operational strategies. With the highest-earning asset (Port of Tilbury) making less than every other asset in the other two strategies bar one (Pelham).
The lower accepted bid prices in FFR this month meant that solely providing FFR was on average 12.7% less lucrative than in June.
Operational spotlight - Red Scar
During the two day heatwave (July 18 and 19), high prices during the evening peak in wholesale markets on the first day presented a lucrative spread of £513/MWh for those willing to pursue a merchant strategy. (You can read more about how assets operated on that day here). On the second day (July 19) the opportunity in wholesale markets was less lucrative as the available spread was only £193/MWh. However, Red Scar’s revenues increased 22.4% from the previous day, with an estimated total revenue of £1090/MW due to a large sum of merchant revenues from the Balancing Mechanism (BM). The operational profile of Red Scar on 19th July is highlighted in Figure 4 (below).
Note: Red Scar is a 49 MW / 74 MWh, 90-minute duration asset just outside Preston. It’s owned by Gresham House, and operated by Habitat.
Figure 4 - Red Scar operational behaviour (19 July 2022).
In EFA blocks 1 -4 the asset provided Dynamic Containment (DC) symmetrically. The average clearing price during this period was £22.21/MW/h.
In EFA block 5, whilst contracted to provide DC, the asset was accepted to dispatch 13 MWh in the BM during settlement periods 36 and 37 at an average offer price of £1,116/MWh.
The asset then exported 42.75 MWh in wholesale markets during EFA 6 and was dispatched in the BM again to deliver 3.2 MWh at an acceptance price of £832.77/MWh.
This merchant activity occurred whilst Red Scar was contracted to provide 22 MW and 49 MW in the low- and high-frequency services of DC, respectively.
The asset then imported 4.5 MWh to rebalance its State-of-Charge to continue delivering DC the next day.
The operational profile of Red Scar on this day highlights the opportunity revenue stacking can provide for BESS owners and operators. However, it should be noted currently BESS assets are largely not being utilised in the BM (see below), and operations like above are dependent on being dispatched by the ESO.
Further analysis - July markets in review
Dynamic services clearing prices
Figure 5 (below) shows the average clearing prices (volume-weighted) in DC, DM, and DR for July 2022.
Dynamic suite clearing prices (Dec 22 - Jul 22)
On average across the month, low-frequency Dynamic Containment (DCL) cleared at £30.77/MW/h.
The average clearing price for providing the service symmetrically (at 90% rated power) was £30.44/MW/h in July. This was 19.6% lower than in June.
Like June, it was more lucrative to provide the low-frequency DC service at full capacity than to de-rate capacity and provide the service symmetrically.
DM retained clearing prices similar to last month’s (~£6/MW/h) in both the high- and low-frequency services. Only two assets - Lascar Works and Hulley Road- provided the service at all.
Firm Frequency Response
Figure 6 (below) shows bids accepted in FFR for the 20 assets that participated in the service in July 2022, by EFA block.
The number of assets providing FFR remained the same in July as in June.
Prices in EFA blocks 1-4 (11pm-3pm) were significantly lower than in EFA blocks 5 and 6 (3pm-11pm). On average, they were £12.17/MW/h vs. £22.71/MW/h.
FFR is a pay-as-bid auction, and there was a wide spread of bids in the peak EFA blocks. Accepted bids ranged from £8.49/MW/h to £28.99/MW/h.
BESS activity in the BM
In July 2022, Balancing Mechanism (BM) revenues made up just 0.12% of GB BESS revenues. Figure 6 (below) shows the daily BM revenues for all BMU-registered BESS assets.
GB BESS fleet BM activity (Jul 22)
Wholesale prices
There were few instances of high intraday price spreads in wholesale markets during July 2022 (as expected in summer). However, we still saw unusually high wholesale spreads at times. This is highlighted in Figure 7 (below), which shows the average daily spread available in Nordpool’s day-ahead hourly auction. Because of the opportunity cost in DC throughout the month, BESS assets largely decided against entering into wholesale markets. Two exceptions to this were the two-hour Tesla systems, which generally exported whilst providing the high DR service.
Daily available price spreads (July 2022)
What did success look like in July 2022?
The Modo benchmark for July 2022 was £18,238/MW for the month. Those assets making a higher return than this could be considered more successful than the average.
Following similar trends to June, the most successful assets - those generating the highest revenues - were those that largely provided DC and not FFR. Assets most frequently accepted into DC were able to capture the high clearing prices we saw throughout July 2022. Contego and Holes Bay stood as outliers to this trend, utilising the high-frequency DR service to charge up (and be paid to do so) whilst dispatching in wholesale markets at the same time - albeit at the cost of more cycles per day (as we saw last month).
July has been the second most lucrative month ever for battery assets in GB, despite revenues falling 16.54% from the all-time highs in June 2022. It’ll be interesting to see how revenues evolve with frequency response volume requirements beginning to decrease from the summer highs.
