Modo Energy's July 2026 GB forecast release models increased non-physical trades between day-ahead, intraday and the Balancing Mechanism (BM), driving BESS revenues up 8-10% compared to the April 2026 release.

A more conservative view on carbon capture and storage (CCS) build-out adds more open cycle gas turbines (OCGTs) to the generation mix, widening daily price spreads and supporting a bigger battery fleet. This means more competition and pulls BM revenue down, but the non-physical trading change more than offsets it.

Key takeaways

• Higher volumes of non-physical trading are the single largest driver of the revenue increase in this release.
• Open cycle gas turbines (OCGTs) replace carbon capture and storage (CCS) as the marginal flexible plant in Modo Energy's capacity expansion logic, widening daily price spreads and creating more revenue opportunities for BESS.
• A larger forecast battery build-out increases competition. Balancing Mechanism (BM) bid and offer dispatch rates fall by around 8-9% on average across 2030-2039.
• Gas and carbon prices are updated and BESS revenue curves are recalibrated to the Modo Energy GB indices.
• Longer-duration assets gain the most. An 8h asset's average revenue rises from £173k to £192k/MW/year (+11.2%) over the full horizon, against £54.5k to £58.7k/MW/year (+7.8%) for a 1h asset.

More non-physical trading lifts merchant revenues by 8 to 10% in the July forecast

The July 2026 release assumes more volumes of non-physical trading, which pushes up revenues in intraday and balancing markets.

As a result, merchant revenues are up between 8% and 10% from the April 2026 release.

Previously, Modo Energy's GB dispatch model assumed efficiency losses on non-physical trades between day-ahead, intraday and the BM. This meant a larger spread was required between these markets for a buy (or sell) order to be reversed in a subsequent market (ie day-ahead to intraday, or intraday to BM).

The July 2026 release models these trades without that efficiency loss as the battery does not actually cycle, and volumes increase. This also aligns with seeing higher levels of non-physical trading occurring in the market.

The impact of this change on half-hourly dispatch can be seen below.

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OCGTs replace CCS as the marginal flexible plant, widening daily forecast price spreads

In practice, scaling carbon capture and storage (CCS) remains technically challenging and expensive. Recent political rhetoric implies CCS subsidy money could be diverted to defence. Thus the July 2026 release takes a slightly more conservative view on CCS build-out.

Consequently, the capacity expansion logic now brings forward more OCGT capacity instead. OCGTs have a higher short-run marginal cost (SRMC) than the CCS plant they replace, as they are both more inefficient and subject to a carbon price.