04 May 2023
Imrith Sangha

Battery energy storage revenues: three things you need to know from April

How much did battery energy storage systems earn last month?

Imrith tells you all about it.

The Modo Benchmark for April was £5,077/MW. This is the median revenue of battery energy storage assets in our Leaderboard. As such, any assets that earned more than this in April were more successful than average.

Figure 1

April’s Benchmark was up slightly from March - but was still massively down on the highs we saw in 2022.

So, what’s been happening in the markets to get us to this number? Here are the top three things you need to know from April:

1. High-frequency Dynamic Containment saw record volumes procured

At the end of March (27th), National Grid ESO increased its volume requirements for high-frequency Dynamic Containment - by an average 400 MW across the day.

This led to record levels of the service being procured in April. On average, 385 MW more were procured in each EFA block than in March.

Figure 2

April was the third-highest month for clearing prices since the service launched - with the highest average prices since February 2022.

Figure 3

All of this meant that high-frequency Dynamic Containment was responsible for 47% of April’s battery energy storage revenues - more than all the other frequency response services combined.

Figure 4

2. Monthly Firm Frequency Response prices hit new lows

Volume requirements dropped to just 250 MW throughout the day - which saw saturation pushing down prices even further.

Figure 5
  • April’s average prices (across all EFA blocks) dropped 30% from March.
  • Prices for the high-value EFA blocks (5 and 6) were down a massive 68% from where they were in January.

Find out what May’s FFR results look like here (spoiler alert: it’s more bad news for battery owners).

3. Balancing Mechanism actions for battery energy storage reached an all-time high

Following saturation in frequency response services, batteries are now more available than ever to turn up (Offer) in the Balancing Mechanism.

This increased availability led to batteries dispatching 5.3 GWh of offers in April - an all-time high!

Figure 6

In April, Balancing Mechanism revenues made up 6.85% of the total battery revenue stack. This is the highest-ever proportion of monthly battery energy storage revenues to come from the Balancing Mechanism.

Figure 7

What else happened in April?

New assets entered frequency response

In April 2023, three new assets (>5 MW) provided a Dynamic frequency response for the first time:

Figure 8

The ‘market entry’ date simply refers to the earliest date each asset was contracted to provide either Dynamic Containment, Dynamic Moderation, or Dynamic Regulation.

Overall revenues were up from March

In April, average earnings (£/MW) for battery energy storage assets were 9.4% higher than in March.

The average annualized revenue for April was £58,146/MW.

Figure 9

Dynamic frequency response prices kept falling

For the tenth consecutive month, low-frequency Dynamic Containment prices fell. In April 2023, the service cleared at £1.96/MW/h - the lowest price since the service launched in October 2020.

Figure 10

Wholesale spreads were the lowest they’ve been in 2023

The average daily wholesale spread available in April 2023 was £55.72/MWh - down 23% from March (£72.06/MWh). April had the lowest average monthly spreads of this year so far.

The graph below shows the average daily spread available, using an average price from both Nordpool and EPEX’s day-ahead hourly auctions.

Figure 12

Want to find out more? Head along to the Modo Leaderboard to check out April’s battery energy storage revenues in more detail.