In the first half of 2024, battery energy storage systems in ERCOT earned revenues of around $70/kW (annualized), on average. And there was a huge disparity between what individual systems earned - with the highest-earning battery in ERCOT making annualized revenues of $130/kW during this period.
Revenues began strongly in January, largely due to Winter Storm Heather. There were also some major spikes in May - but milder system conditions in June mean that revenues have since cooled off, and fallen behind where they were in 2023 at this time.
Due to these milder system conditions, revenues were 20% lower at the end of June than they were in the previous year. Batteries earned an average of $88/kW (annualized) in the first half of 2023.
This year-on-year decrease was due to a variety of factors, including:
- Milder system conditions in June - which led to lower overall demand.
- And a 120% increase in the installed rated power of batteries from 2023 - which led to lower Ancillary Service prices.
Despite this, revenues from some markets - specifically Energy arbitrage, ECRS (which only launched in June of last year), and Non-Spinning Reserve - have actually been higher so far in 2024.
In the past twelve months, battery energy storage rated power in ERCOT has more than doubled
From the end of June 2023 to the end of June 2024, the total installed rated power of battery energy storage in ERCOT rose from roughly 2.4 GW to 5.3 GW. This represents a 120% growth in twelve months.
This addition of nearly 3 GW of new battery energy storage rated power (MW) has contributed to increased competition in Ancillary Service markets - leading to signs of saturation in battery-dominated services, and subsequently lower prices.
This has led to a decrease in the proportion of revenues that battery energy storage systems in ERCOT have earned in Ancillary Services markets.
In the first half of 2023, Energy arbitrage accounted for 14% of battery revenues. And the remaining revenues came predominantly from Responsive Reserve (RRS) and Regulation services.
In the first half of 2024, Energy arbitrage accounted for 26% of battery revenues. And the remaining Ancillary Service revenue proportions were more evenly balanced:
- 29% of revenues came from ECRS.
- 26% of revenues came from Responsive Reserve (RRS).
- 14% of revenues came from Regulation Up and Down.
- And 6% of revenues came from the Non-Spinning Reserve service.
Which battery energy storage characteristics were most advantageous in the first six months of 2024?
The highest-earning battery in ERCOT over the first half of 2024 was Triple Butte BESS.
This battery is owned by Jupiter Power, and it outperformed the Index by 86%.
Triple Butte is a 7.5 MW, two-hour DGR, located in West Texas. These specific characteristics meant it had some advantages in the first six months of 2024:
- West Texas has historically offered the largest daily price spreads (Energy arbitrage).
- Its two-hour duration allows it to take advantage of these price spreads over a longer time frame in a given day.
- This longer duration also has capacity allocation benefits when offering into Ancillary Services that have longer contract requirements (e.g. ECRS, with its two-hour contracts; Non-Spin, with its four-hour contracts).
To learn more about how location impacts battery energy storage revenues in ERCOT, check out our Battery Location Deep Dive.
Subscribers to Modo’s ERCOT products can continue reading below. Learn more about individual battery performances in the first half of 2024.
How did individual batteries perform in the first half of 2024?
Batteries that outperformed the Index tended to earn a larger proportion of their revenues from ECRS and Non-Spin.
The top five performing batteries in the first half of 2024 were all sites owned by Jupiter Power:
- Triple Butte.
- Swoose 1 & 2.
- Flower Valley 1 & 2.
All five of these sites are two-hour systems located in West Texas. Collectively, they averaged:
- 46% of their revenues from Energy arbitrage - utilizing the large intraday energy price spreads available in their zone.
- 16% of their revenues from Non-Spin - over 3x higher, proportionally, than the average battery in ERCOT.
Additionally, nine of the top ten performing sites were all two-hour battery energy storage systems.
On average, two-hour systems in the first half of 2024 earned 19% higher revenues than their one-hour counterparts.
But this does not show the full picture. Given the revenue advantages for longer-duration batteries, it is worth also comparing revenues on a per-kilowatt-hour basis.
Eleven out of the top twelve performing batteries, on a per-kilowatt-hour basis, were all owned by Hunt Energy Network.
All of these sites earned above-average proportional revenues in ECRS and Non-Spin.
- 38% of their revenues-per-kilowatt-hour came from ECRS - compared to 26% for the entire Index.
- 10% of their revenues from Non-Spin - over 2x higher, proportionally, than the average battery in ERCOT.
So far, we have seen that the key to outperformance in the first half of 2024 was to focus on participation in ECRS and Non-Spin services.
Which large battery owners in ERCOT have outperformed the Index so far in the first half of 2024?
Jupiter Power’s battery portfolio outperformed other large battery owners in the first half of 2024. Jupiter’s portfolio includes the top five earning battery energy storage systems, on a per-kilowatt basis, in ERCOT.
Other portfolios that outperformed the Index in the first half of 2024 were:
- Plus Power.
- Eolian.
- Key Capture Energy.
- Hunt Energy Network.
- Gore Street Capital.
And, in general, owners that focused on the combination of Energy arbitrage, ECRS, and Non-Spin markets tended to outperform the Index.
How do battery revenues in the first half 2024 compare to last year?
In the first half of 2024, battery energy storage systems in ERCOT have earned cumulative revenues of $35/kW. This is 20% lower than for the first half of 2023, where batteries earned cumulative revenues of $44/kW.
And, if we extend battery revenues beyond the end of June, up to the end of August (based on Modo Energy’s ERCOT BESS Index “nowcast”), the disparity between 2023 and 2024 becomes even more stark.
ERCOT has a 60-day lag in publishing its market disclosure data. Because of this, we only have confirmed battery energy storage revenues for January through June. However, with Modo Energy’s ERCOT BESS Index “nowcast”, you can benchmark system-wide revenue performance all the way up to the present.
According to the Modo Energy “nowcast”, despite a couple of high-earning days, batteries in ERCOT are projected to have earned a cumulative $43/kW through the end of August 2024.
In 2023, there were huge spikes in battery revenues during the summer months of July and August. Because of this, only 18% of the annual revenues earned by batteries in ERCOT in 2023 were earned after September 1st.
Given that the summer of 2024 has thus far experienced milder weather than the summer of 2023, there have been lower revenue opportunities for batteries due to milder system conditions.
Nonetheless, September 2023 was a huge revenue month for batteries in ERCOT - so owners and operators will be looking for opportunities this September and into the fall of 2024.
Check back in with us next month for an update on battery energy storage revenues through July 2024.