17 May 2024
Avery Dekshenieks

ERCOT: How quickly do batteries participate in Ancillary Services?

Once a battery energy storage system has been commissioned, it can start earning revenues - in Energy markets and Ancillary Services. However, before a battery can participate (and earn revenues) in an Ancillary Service, it needs to meet the qualification requirements.

Historically, some batteries have been able to participate in Ancillary Services sooner than others.

How long does it take battery energy storage systems to start participating in Ancillary Services?

How does a site qualify for Ancillary Services?

To qualify for participation in an Ancillary Service market, the QSE must obtain approval from ERCOT. There are four levels of qualification - ranging from Level 1 (which simply allows a system to participate in energy markets), to Level 4 (which allows a system to participate in all markets - including Ancillary Services).

To date, 104 different battery energy storage systems have participated in at least one Ancillary Service in ERCOT.

Depending on the level of qualification, this process takes roughly one to four months.

How long does it take battery energy storage systems to start participating in Ancillary Services?

Over time, most batteries participate in all Ancillary Service markets at some point. Some assets pre-qualify, and participate in these services as soon as they are commissioned. Others take longer to participate - which means that they could be leaving potential revenues on the table.

So, how long does it take battery energy storage systems to start participating in Ancillary Services following their commissioning dates?

On average, batteries start participating in Reserve services more than 4x faster than in Regulation services.

Why does this matter?

In 2023, battery energy storage projects earned 85% of their revenues from Ancillary Services. And 26% of these came from the ERCOT Contingency Response Service (or ECRS) - despite it launching in June.

Overall, ECRS revenues are only a portion of a site’s annual revenue. Sites that do not participate in ECRS can earn revenues in other Ancillary Services, and in Energy wholesale markets. And they can still outperform sites that do participate in ECRS. There is no one correct strategy.

In the three months following its launch in June, clearing prices in ECRS averaged $117/MWh - more than 11x more than the average since.

Batteries that participated in ECRS within the first month of its launch earned 18% higher overall revenues in the following 9 months than batteries that qualified later (if at all).

However, most of that extra revenue uplift for those sites came from Regulation Up and Down, and Energy arbitrage.

Below, Benchmarking Pro ERCOT subscribers will learn how the participation timeline of individual sites affected revenue opportunities from June 2023 to March 2024.

You can also compare the timelines of multiple portfolios, grouped by owner.

Which battery energy storage owners have a track record of quick participation?

Each battery energy storage site is unique - with its own timeline for Ancillary Service participation. The length of time between commissioning and participating can depend on a number of factors, such as:

  • Issues during the qualification process.
  • An owner or operator’s preferred Ancillary Service strategy.

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