Pricing
01 Sep 2022
Imrith Sangha

Leaderboard update: understanding the August 2022 Revenue Benchmark

To go alongside the publication of our August 2022 Leaderboard, Alex and Imrith discuss the market trends that have shaped this month's revenue benchmark. Plus subscribers can also dive deeper into these revenues on an asset-by-asset basis by reading our article ‘August 2022 Leaderboard: what Asset Success looked like’.

Imrith and Alex discuss the August 2022 Leaderboard

Fleet revenues

Figure 1 (below) shows the average fleet revenues for BESS assets in Great Britain (GB) from January 2020 to August 2022 (inclusive).

Average GB fleet revenues (Jan 20 - Aug 22)

In August 2022, average earnings (£/MW) for battery energy storage system (BESS) assets decreased by 26.01% from the previous month - to an annualised revenue of £166,227/MW.

Dynamic services clearing prices

Figure 2 (below) shows the average clearing prices (volume-weighted) in the Dynamic Frequency Response suite services for August 2022.

Dynamic suite clearing prices (Feb 22 - Aug 22)

  • On average across the month, low-frequency Dynamic Containment (DCL) cleared at £20.79/MW/h. This was £9.98/MW/h lower than in July.
  • The average clearing price for providing the service symmetrically (at 90% rated power) was £21.79/MW/h in August 2022.
  • The number of assets participating in high-frequency Dynamic Regulation (DRH) increased from six in July to nine in August. This increase in competition caused average clearing prices to fall 42.56% from £34.87/MW/h to £20.02/MW/h.
  • Dynamic Moderation (DM) clearing prices increased (on average) by 32.97% in both the high- and low-frequency services. In total, only four assets provided DM (Battery Lane, Hallen, Hulley Road, and Lascar Works).

Firm Frequency Response

Figure 3 (below) shows bids accepted in Firm-Frequency-Response (FFR) for Leaderboard assets that delivered the service in August 2022 by EFA block.

Figure 2 - FFR contracts secured by Leaderboard assets (August 22).
  • The number of Leaderboard assets providing FFR was fourteen in August, down six from the previous month.
  • Prices in EFA blocks 1-4 (11pm-3pm) were significantly lower than in EFA blocks 5 and 6 (3pm - 11pm). On average they were £15.45/MW/h vs. £27.18/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 £8.50/MW/h to £32.90/MW/h.

BESS activity in the BM

In August 2022, Balancing Mechanism (BM) revenues made up just 1.52% of GB BESS revenues. Figure 4 (below) shows the daily BM revenues for all BMU-registered BESS assets.

GB BESS fleet BM activity (Aug 22)

Wholesale prices

The average daily spread available in August 2022 was £215/MWh. This indicated the potential revenue opportunity available in merchant markets. This opportunity is highlighted in Figure 5 (below), which shows the average daily spread available in Nordpool’s day-ahead hourly auction.

Daily available price spreads (August 2022)

What influenced the Modo benchmark in August 2022?

The Modo benchmark for August 2022 was £12,670/MW for the month. Those assets making a higher return than this could be considered more successful than the average.

Figure 6 (below) shows a breakdown of annualised BESS fleet revenues for August 2022. The key market influencing the Modo benchmark for the month was DCL. Average revenues were lower than in July 2022 because of the lower volume procured in the service (881 MW vs. 802 MW) and the lower average clearing price (£30.77/MW/h vs. £20.79/MW/h). This saw the value of the service to the fleet revenue stack fall by 39.22% in August 2022 compared to the previous month.

Fleet revenues (August 22)

£/MW/a0

August has been the fourth most lucrative month ever for battery assets in GB, despite revenues falling 38.30% from the all-time highs in June 2022. It’ll be interesting to see how revenues evolve as merchant markets begin to play a larger role as we move closer to winter.