Pricing
01 Dec 2022
Imrith Sangha

November 2022 Leaderboard: understanding the benchmark

There have been many changes this month - including changes to our methodology and how you can interpret the Leaderboard in the platform. Check out our latest product release article here to stay in the loop. You can now directly compare the portfolios of battery energy storage owners and operators.

To go alongside the publication of our November Leaderboard, Alex and Imrith discuss the market trends that have shaped this month's battery energy storage revenue benchmark. Plus subscribers can also dive deeper into these revenues on an asset-by-asset basis - so check those out.

Imrith and Alex discuss market trends in November 2022.

Fleet revenues

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

Fleet revenues continue to fall

In November 2022, average earnings (£/MW) for BESS assets decreased by 7.71% from the previous month - to an annualized revenue of £102,436/MW.

Dynamic frequency response services

Figure 2 (below) shows the average clearing prices (volume-weighted) in Dynamic frequency response services for November 2022.

Value of low-frequency DC reaches all-time low

  • On average, low-frequency Dynamic Containment cleared at £7.55/MW/h. This was the lowest average monthly clearing price since the service launched in October 2020.
  • The average clearing price for providing Dynamic Containment symmetrically (at 90% rated power) was £10.29/MW/h.
  • High-frequency Dynamic Regulation average clearing prices remained steady compared to last month at £6.75/MW/h.
  • Huge price spikes saw low-frequency Dynamic Containment clear at £105/MW/h in EFA 5 on 28th November 2022. If we exclude the two days of price spikes (28th November and 29th November), the average clearing price for low-frequency Dynamic Containment was only £6.41/MW/h.

Firm Frequency Response

Figure 3 (below) shows bids accepted, by EFA block, in Firm Frequency Response - for the 18 Leaderboard assets that delivered the service in November.

Figure 3 - FFR contracts secured by Leaderboard assets (November 22).
  • 18 Leaderboard assets provided Firm Frequency Response in November, up one from October.
  • Prices in EFA blocks 1-4 (11pm-3pm) were significantly lower than in blocks 5 and 6 (3pm - 11pm). On average, they were £19.99/MW/h vs. £29.86/MW/h.
  • The Firm Frequency Response auction is pay-as-bid. There was a wide spread of accepted bids, ranging from £8.90/MW/h (in EFAs 1 and 2) to £37.00/MW/h (EFAs 5 and 6).

Battery energy storage in the Balancing Mechanism

In November 2022, Balancing Mechanism revenues made up just 0.36% of GB battery energy storage revenues. In November, average Balancing Mechanism revenues for Leaderboard assets were £367/MW/a. This follows a similar trend to October where revenues were £484/MW/a - an 83.9% drop from September.

Figure 4 (below) shows the daily Balancing Mechanism revenues for all Balancing Mechanism-registered battery energy storage assets.

BESS Balancing Mechanism activity remains low

Wholesale prices

The average daily spread available in November 2022 was £158.42/MWh. This was 25.1% higher than in October (£126.60/MWh).

Huge price spikes recently saw two extremely lucrative spreads greater than £850/MWh. Figure 6 (below) shows the average daily spread available using an average price from both Nordpool’s and EPEX’s day-ahead hourly auctions.

Huge recent price spikes boost November revenues

Triads

This winter 2022/2023, we will estimate Triad revenues each month as part of the Leaderboard. This is to have greater visibility on optimization decisions around Triads. You can read more about our methodology in full here. Following our methodology, the expectation of a Triad in November 2022 is unlikely. We have determined that no periods constitute a ‘potential triad’, and have therefore not assigned revenues. Figure 7 (below) shows the initial demand out-turn for every settlement period in November against the minimum Triad demand value.

Figure 7 - National INDO demand (November 2022).

What influenced the Modo benchmark in November 2022?

The Modo benchmark for November 2022 was £8,809/MW. Assets earning more than this could be considered more successful than the average. (We have updated our methodology for calculating our benchmark - you can read more here.)

Figure 7 (below) shows a breakdown of annualized battery energy storage fleet revenues for November 2022.

DC still remains largest revenue stream

£/MW/a0

Record-low average clearing prices (£7.55/MW/h) in low-frequency Dynamic Containment saw the value of the main battery energy storage market fall for the sixth month in a row - since the all-time highs seen in June 2022 (£38.08/MW/h). Huge price spikes in power markets saw wholesale revenues 244.14% increase from the previous month - providing a well-needed revenue boost right at the end of the month.

These factors played a significant role in battery energy storage revenues last month - resulting in November 2022 being the lowest-earning month for batteries since December 2020.