A roundup of all you need to know from the markets most relevant to battery energy storage.
The headlines this week are:
🍃 Another week of reduced power prices due to high wind generation
↕️ Frequency response prices rise for Dynamic Regulation and Dynamic Containment but fall for Dynamic Moderation
💥 FFR remains top of the Market Benchmarks
🤯 Wind contributes to half of the generation mix in Great Britain so far in 2023
📜New consultation on Capacity Market reforms published by BEIS
Key metrics
- Average day-ahead price: £107 /MWh, -13%
- Average day-ahead spread: £140 /MWh, -8%
- Maximum day-ahead price: £190 /MWh, -23%
- Minimum day-ahead price: £1 /MWh, 0%
Power prices fell compared to last week, with wind generation reaching new highs. This is despite an increase in demand following the end of the festive period. The high winds caused prices to fall close to zero overnight three times, reaching as low as £0.95/MWh on Sunday 8th January.
Wind records were broken yet again, with National Grid reporting over 21.6 GW of wind-generated power in the evening of Tuesday 10th January. This beats the 20.91 GW generated on 30th December, which we highlighted in our last weekly review. This meant that from 18:00 - 18:30 during peak demand on Tuesday, just over 50% of Great Britain’s electricity was being generated by wind!
Frequency Response
Key metrics:
- Average dynamic containment low price: £5 /MW/hr, +41%
- Average dynamic containment bid volume: 1040 MW, -8%
- Average dynamic containment accepted volume: 723 MW, +0%
Dynamic Moderation High was the only dynamic frequency service to see prices fall this week, down 26% from last week. The remaining dynamic frequency response services saw an increase in price or no change, but overall prices remained low.
The frequency response markets saw steady participation throughout the week and remain saturated. Alongside lower wholesale trading opportunities, this is the reason that frequency response prices remain low.
Battery market benchmark revenues
Key metrics:
- Dynamic Containment benchmark: £66k /MW/yr (+45%)
- 1-hour day-ahead trading benchmark: £46k /MW/yr (-20%)
- 2-hour day-ahead trading benchmark: £88k /MW/yr (+52%)
FFR stays top of the revenue benchmark leaderboard for both one-hour and two-hour battery energy storage systems at £143/MW/yr.
Dynamic Containment kept its position for one-hour battery energy storage with 45% growth on last week but remains well below the value obtainable in FFR. Meanwhile, Dynamic Regulation climbed up the leaderboard for two-hour batteries, following 4% growth on last week to £107/MW/yr.
Next week
Key metrics:
- Maximum National Grid ESO Demand Forecast: 43.0 GW Tuesday 17th January
- Minimum National Grid ESO Surplus Forecast: 5.7 GW Friday 20th January
Demand is projected to be on the increase again next week but still remains relatively low with mild weather continuing. The combination of this with another week of high winds in the forecast means that margins should be healthy all week.
Chart of the week
High wind generation has been mentioned frequently throughout this article, so surprise, it is also the source of this week’s chart of the week.
As previously mentioned, wind-generated power was responsible for over 50% of Great Britain’s energy mix when the half-hourly record was broken on Tuesday. Taking a look at the year so far, we can see that the high winds we have been experiencing means that wind has contributed half of GB’s generation mix so far in 2023.
As a result, gas generation has been relatively low, with nuclear the next highest contributor after wind. Overall, zero-carbon electricity sources have provided two-thirds of the generation mix for Great Britain so far this year.
This all helps to explain the low prices so far in January, as more expensive forms of generation are kept well out of merit.
Policy updates
This week, BEIS launched a new consultation on key reforms for the Capacity Market. It can be found here. This is with the intention of better aligning the Capacity Market with the government’s net zero targets and improving assurance of the scheme.
It includes proposals for changes to how Satisfactory Performance Days (SPDs) are carried out and for strengthening the non-delivery penalty regime, so is definitely worth engaging for those active in the Capacity Market.
The consultation is open now and closes on 3rd March 2023.