A roundup of all you need to know from the markets most relevant to battery energy storage.
The headlines this week are:
📉 Larger day-ahead spreads due to higher wind generation this week
🚀 A record maximum volume of 306 MW bid into the Dynamic Regulation High market
⬇️ National Grid ESO announces monthly Dynamic Firm Frequency Response requirement for March will have a 50 MW reduction across all EFA blocks, beginning the phase-out of the service
⬆️ Dynamic Regulation will see a 100 MW increase in requirement volume across all EFA blocks from March
Key metrics
- Average day-ahead price: £135/MWh, -17%
- Average day-ahead spread: £88/MWh, +6%
- Maximum day-ahead price: £194/MWh, -24%
- Minimum day-ahead price: £49/MWh, - 58%
This week, power prices dropped well below £100/MWh on multiple days, thanks to a week of high wind generation. Although the maximum day-ahead price was fairly low at £194/MWh, these price drops created a higher average spread than last week.
Frequency Response
Key metrics:
- Average Dynamic Containment Low price: £4.63/MW/hr, -15%
- Average Dynamic Containment bid volume: 952 MW, -3%
- Average Dynamic Containment accepted volume: 648 MW, +1%
High prices were scarce in Dynamic Containment, and the average price fell again. In contrast, Dynamic Containment High was the only frequency response service where prices increased this week.
Yet again, competition increased for the Dynamic Regulation High market. This week we saw a maximum bid volume of 306 MW on Tuesday 31st January - a new record! The average bid volume into the service was 200 MW, twice as much as the (current) 100 MW requirement - more on that later.
As a result, the average Dynamic Regulation High prices dropped to a meagre £0.55/MW/h. The fierce competition to win contracts in the service is what is forcing operators to get creative with bidding strategies - check out this article to find out more.
Battery market benchmark revenues
Key metrics:
- Dynamic Containment benchmark: £54k/MW/yr (-3%)
- 1-hour day-ahead trading benchmark: £29k/MW/yr (+16%)
- 2-hour day-ahead trading benchmark: £54k/MW/yr (+19%)
Dynamic Regulation had another strong week in the revenue stream leaderboard, but Firm Frequency Response remained on top, signaling it still plays a big role in the revenue stack of the battery energy storage fleet.
Although there was a slight increase in day-ahead spreads, it wasn’t enough to generate much increase in the day-ahead trading value.
Next week
Key metrics:
- Maximum National Grid ESO Demand Forecast: 43 GW Thursday 9th February
- Minimum National Grid ESO Surplus Forecast: 4.1 GW Thursday 9th February
Despite higher demand in the forecast than this week, there’s strong surplus predicted across next week, with the minimum being 4.1 GW. On Saturday 4th February surplus is forecast to reach as high as 18 GW according to current National Grid ESO data, due to increases in wind generation. The maximum demand forecast on Thursday 9th means a Triad could be on the cards.
Chart of the week
National Grid ESO released their monthly Frequency Response Products Information Report for March, confirming that it will be taking steps to phase out Dynamic Firm Frequency Response.
In March there will be a reduction in service requirements of 50 MW across every EFA block. The Report also suggests that this reduction will continue in future months. More details will be available on this soon - keep an eye out for the Frequency Response Transition report expected in the coming weeks.
At the same time as retiring Firm Frequency Response, National Grid ESO will increase the requirement for Dynamic Regulation services from 100 MW to 200 MW. Our chart of the week shows how these services are expected to change over the next few months.
In March:
- The Firm Frequency Response requirements for EFA blocks 1-4 will reduce from 300 MW to 250 MW.
- The Firm Frequency Response requirements for EFA blocks 5-6 will reduce from 350 MW to 300 MW.
- The requirements for Dynamic Regulation will increase from 100 MW to 200 MW (for every EFA block).
National Grid ESO have not yet announced the details beyond March. However, it has said that the Firm Frequency Response requirements will decrease by no more than 50 MW per month, with the aim of the service being completely phased out by October.