09 May 2022
Alex Done

Top 9 things you need to know about batteries from Q1 2022

This article (and accompanying video) relates to our Quarterly Calls - where we have bespoke calls with Modo Enterprise teams to look at trends and news from the world of battery energy storage in the previous quarter. These are exclusive to users on our Enterprise subscription.

Battery energy storage is a constantly evolving asset class. It is playing an increasing role in a variety of markets as we attempt to achieve our net-zero goals. New batteries are being built all the time, and the commercial case is stronger than ever. Here at Modo, we provide data and insights around battery energy storage systems (BESS) in Great Britain - and now Ireland too!

One part of our premium Enterprise offering is our Quarterly Call. This is where our Research team offer Modo’s Enterprise users a bespoke run-down of all the major happenings and emergent trends in the GB BESS world, from the previous quarter. This involves an in-depth presentation, using our specialist data and unique insights, followed by a lively question and answer session.

Our users love their Quarterly Calls, but it can often be difficult to arrange them at a time that suits everybody, despite our best efforts. Because of this, Robyn Lucas (Chief Analytics Officer) and Alex Done (Head of Research) have recorded the latest presentation, for those users who want access to the Quarterly Call at a time that suits them. Make sure to check out the video below. Underneath that, we’ve also embedded all of the slides and graphs from the call.

Q1 2022 Modo Quarterly Call (with Robyn and Alex)

Without further ado, here are the top 9 things you need to know about battery energy storage from Q1 2022.

1. We expect installed battery energy storage capacity in GB to (almost) quadruple in the next three years

Updated build-out view shows 6.5 GW by 2026
  • As outlined in Imrith Sangha’s March update of Modo’s Future of GB battery energy storage buildout report, we expect to see installed BESS capacity top 6 GW in Q3 2025.
  • In Q1 2022, we saw an extra 85 MW of capacity come online.
Who gets us to 6.5 GW?
  • As you can see above, we’ve highlighted some of the main players whose battery build-out plans will help push us towards that 6.5 MW figure. Gresham House is planning on building over 800 MW of new battery energy storage assets by 2025.
Q1 2022 saw two new entrants to the ownership space
Gore Street Energy Storage Fund international acquisitions
  • We also saw Gore Street Energy Storage Fund acquiring its first batteries on the continent and in the US.

2. February saw new all-time highs for GB battery energy storage revenues

New highs for GB BESS revenues
  • In February 2022, we saw new record-high battery energy storage revenues in GB, with assets earning £151k/MW (annualised) during the month.
A closer look at the Q1 Leaderboard
  • We saw a range of different revenue strategies across Q1. Each of these bars represents a different asset from the Modo Leaderboard, and you can see which markets they made their money in across Q1 2022.
Q4 2021 vs. Q1 2022

3. High DCL prices were a driver of those February revenues

DC price and volume update
Forward view of DC requirements

4. Loads of new auction changes took effect in DC

Three key changes to the DC market

Q1 saw three major key changes to the Dynamic Containment service and auction design. We’ve written about each of these in more detail, and you can check out those articles below:

  1. Price caps and demand elasticity
  2. The end of merit-order constraints
  3. Short-term DC forecasts
Introduction of dynamic, elastic demand curves
Dynamic Containment market potential increases dramatically
New buy orders result in highest DCL prices ever
  • We saw a new all-time high price in DCL of £104/MW/h, during EFA block 3 on 7th April.
Removal of merit-order constraints
Example auction with merit-order constraints
Example auction without merit-order constraints
  • In the two graphs above, you can see the effects that the removal of merit-order constraints can have on an auction.
How do the changes impact the market?

5. Higher than normal FFR prices helped boost the battery energy storage revenue stack

Higher than normal FFR prices helped boost the battery energy storage revenue stack
  • FFR prices in April were up 188% on the same time last year.
FFR to Dynamic Containment switching
  • We can see the shift away from, and then back into, FFR over time.
Retiring FFR service still a key value driver for BESS

6. We got a glimpse of what the new Dynamic suite of frequency response services will look like

To find out more about the respective launches of the Dynamic Regulation and Dynamic Moderation services, head along to:

  1. Understanding frequency response in GB: in our first ever Modo Live event, we shone a light on the launch of Dynamic Regulation. You can watch the event in its entirety by following the above link, or you can see the Dynamic Regulation slides here.
  2. Dynamic Moderation - the first three days
Managing grid stability - dynamic frequency response suite
High cycling rate of Dynamic Regulation may dissuade BESS participation
  • Cycling rates are important because batteries will want to keep within warranty limits and not degrade their systems too much. They matter because batteries may want to further de-rate their capacity to only cycle a certain amount of times per day.
  • As we can see, DC requires far less cycles than DR.
Phased transition from FFR to Dynamic frequency response suite
  • Above, we’ve outlined the four stages of the frequency response transition.
Transitional approach will lead to demand glut across summer 2022
A first look at Dynamic Regulation

7. Wholesale prices have calmed down a bit

Wholesale pricing has calmed slightly into 2022
Market volatility continues, despite falling from Q4 2021 levels

8. The Triad that wasn’t

Triads have become more and more difficult to predict over the past few years. We wrote an article looking at BESS activity in and around the winter 2021/22 Triad periods:

Imrith and Neil discuss what batteries were doing during the winter 2021/22 Triad season
Triads for the year published
The Triad that wasn’t
GB BESS fleet operation over Triad 1 and 2
Triad success rate for BESS
Optimisation spotlight over Triad period

9. Battery energy storage in Ireland is booming

You may have seen that we released a free report into the state of battery energy storage in Ireland:

The Irish market has a unique supply mix
DS3 System services are the dominant monetisation strategy for BESS in Ireland
BESS is booming in Ireland

Keep your eyes peeled for loads more insights into battery energy storage in Ireland, coming very soon.

If you’re an Enterprise user and haven’t yet booked your Quarterly Call, make sure to get in touch with us via Intercom (the little blue circle in the bottom-right of your screen).