06 Jul 2023
Charlie Hetherington

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

How much did battery energy storage systems in Great Britain earn last month?

Charlie explains the three things you need to know about June’s revenues.

The Modo Benchmark for June was £3,836/MW - up 3% from May.

This is the median revenue of Balancing Mechanism registered batteries in our Leaderboard this month. While it’s a slight uplift from May’s all-time low, revenues are still significantly lower than this time last year.

So, what happened in the market that affected these numbers? Here are the top three things you need to know from June.

1. No repeat of last summer’s Dynamic Containment bonanza

National Grid ESO procured record volumes of Dynamic Containment in June - 1,172 MW of Dynamic Containment High, and 813 MW of Dynamic Containment Low (on average).

This mirrors the seasonal pattern observed last year - more Dynamic frequency response is needed in the summer months to compensate for lower inertia on the system (owing to higher solar generation).

Last June, Dynamic Containment revenues hit record levels. But, since then, nearly 1 GW of battery capacity has been added to the fleet, and this extra capacity has caused prices to plummet.

The average price for Dynamic Containment Low in June was just £1.41/MW/h a very slight increase from the previous month, but 96% lower than in June 2022.

2. There was more battery energy storage action in the Balancing Mechanism than ever before

National Grid ESO dispatched the biggest-ever volume of Balancing Mechanism actions for battery energy storage. 8.4 GWh of Offers and 6.1 GWh of Bids made by batteries were accepted – a 37% increase on the previous record set in May!

Despite this, Balancing Mechanism revenues only made up 7% of the revenue stack for the battery fleet.

3. Wholesale prices and spreads creep up after steadily declining all year

Gas prices in Europe and the UK increased in June, which resulted in average wholesale prices rebounding from lows at the end of May.

As a result, average daily price spreads increased by 20% in June to £49.22/MWh.

The larger spreads meant wholesale trading accounted for 8% of battery revenues in June, compared to just 5% in May.

So, how much could a battery have made on the day-ahead market in June? Assuming a battery trades one cycle per day, with perfect forecasting on EPEX SPOT’s day-ahead auction:

  • A one-hour system would have made £15,832/MW.
  • A two-hour system would have made £29,829/MW.

(Want to know how we calculate this? Find out here)

What else do you need to know from June?

170 MW of new battery capacity came online

Three new grid-scale (>7 MW) batteries came online in Great Britain last month.

The 100 MW Dollymans battery is now one of the largest in Britain - and it’s the only battery Balancing Mechanism Unit (BMU) larger than 50 MW. The other 100 MW systems (Minety, Capenhurst, and Pillswood) have all split their capacity into multiple smaller BMUs.

As a result, Dollymans received the single biggest Balancing Mechanism dispatch ever by a battery since becoming operational - 99 MW on 21st June.

Dynamic Containment still contributes the most to the battery revenue stack in Great Britain

Despite record-low prices in Dynamic Containment Low, Dynamic Containment still accounted for 53% of the fleet’s revenues in June.

This was thanks to prices in the High service, which increased 20% from May, from £3.94/MW/h to £4.68/MW/h.

Monthly FFR to disappear by November

Batteries which pursued a Monthly Firm Frequency Response strategy did well this month. But the average price in June was just £6.59/MW/h and on a downward trend as the service is phased out (more on prices can be found here).

National Grid ESO confirmed the final plans for a transition away from Monthly Firm Frequency Response: the volume requirements are falling 50 MW each month, until the end of the service. The ESO will hold the final auction in September for October delivery.

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