ECRS has served as a high-revenue market for battery energy storage systems that qualified to provide the service since it launched in June of 2023.
In the first full year since its launch, battery energy storage systems - that have been operational since before the launch - earned roughly 28% of their revenues from the new service.
Something that stands out is the outsized performance of ECRS relative to the other Ancillary Services.
For instance, for the same level of capacity allocation - 3% - batteries earned six percentage points less of their revenue from Regulation than from ECRS.
And this high proportion of revenues relative to the proportion of capacity allocated has also been generally consistent across all Ancillary Services.
Put more simply, these services offer high revenue opportunities for relatively low contracted capacity.
As a result, ECRS was extremely influential in a battery’s overall performance in the twelve-month period since its launch. In that time, seven sites in ERCOT earned more than 50% of their revenues from ECRS.
These seven ECRS-focused battery energy storage systems, on average, outperformed the Index by 50%, earning $308,000/MW over this year-long period.
But is this sustainable?
Much of the aforementioned outperformance happened last summer. This was when ECRS had first launched, and fewer resources qualified for and participated in this service.
As a result, less volume was offered into the Day-Ahead Market to provide ECRS.
This led to ECRS clearing prices that were more than 2x the other Ancillary Services - on average - in the first three months following its launch.
Over the same three-month period in 2024, ECRS clearing prices have - on average - been just 1.47x the other Ancillary Services.
If we look at just July and August of 2024, ECRS clearing prices averaged just $4.74/MW/h.
This was 29% lower than the average clearing prices of all other Ancillary Services, which averaged $6.72/MW/h.
Modo Energy’s ERCOT subscribers can read the full article below to learn about:
- The impacts of ECRS on battery revenues, capacity allocations, and cycling rates.
- Ancillary Service saturation and how it may impact operational strategies in the future.
- The systems that outperformed other battery energy storage systems in ERCOT in the 12 months following ECRS' launch by employing an ECRS-dominant strategy.
How did battery energy storage systems with ECRS-dominant strategies fare?
Seven battery energy storage systems earned the majority of their revenues from ECRS in the twelve months following its launch in June 2023.
These sites averaged revenues of $308,000/MW, outperforming the Modo Index over the same period by 50%.
These batteries pursued strategies that were dominated by low-cycling reserve services like ECRS and RRS.
How did the cycling rates of ECRS-focused battery energy storage systems compare to the Index?
Participating in reserve services like ECRS also leads to lower cycling rates than Regulation or Energy Arbitrage-dominant strategies.
To learn more about ERCOT’s Ancillary Services, check out The Energy Academy.
The seven ECRS-focused batteries averaged just 0.44 cycles per day. This was 39% lower than the average battery in ERCOT, which had a cycling rate of 0.72 cycles per day.
These low-cycling rates translated into high revenues on a per-cycle basis, as well.
ECRS-focused batteries earned more than twice the revenues per cycle of other batteries in ERCOT, from June 1oth, 2023 through June 10th, 2024.
Higher cycling can lead to longer downtimes, higher maintenance costs, and even warranty implications.
Check out our piece on the value of a cycle for battery energy storage systems to learn more.
What has led to declining ECRS prices relative to other Ancillary Services?
When ECRS was first launched, many resources had yet to qualify to provide it as an Ancillary Service. This meant that they were unable to offer volume to provide ECRS in the Day-Ahead Market.
This meant that the average total hourly volume offered was only 1.36x higher than the average cleared volume, in the first 30 days following the launch of ECRS.
In the first 30 days following its launch, ECRS hourly average cleared volumes averaged roughly 2 GW.
Over the most recent 30 days of available DAM disclosure data in 2024, cleared volumes have remained relatively constant.
However, offer volumes are much higher.
In June 2024, hourly average offer volumes were roughly 4.2 GW, more than double the average clearing volume.
This increased competition to provide ECRS has contributed to prices falling in line with other Ancillary Services in ERCOT.
While ECRS prices have fallen in line with the rest of the Ancillary Services, batteries have continued to exert downward pressure in all Ancillary Services in ERCOT. This has led to declining Ancillary Service prices relative to Day-Ahead Energy prices, which you can read more about here.
What can we take away from the introduction of ECRS?
Ultimately, ECRS was a key driver for battery energy storage revenues in the months following its launch. And thus far in 2024, batteries with ECRS-dominant strategies have still been able to earn high per-cycle revenues.
Overall, batteries that earned a majority of their revenues from ECRS in the 12 months since its launch had:
- 50% higher revenues/MW.
- 39% lower cycling rates.
- 117% higher revenues/cycle.
However, these revenues were earned predominantly in the first few months of ECRS’ existence. As a result battery energy storage systems that prioritized qualifying for and immediately participating in the service performed strongly.
Since the summer of 2023, revenue opportunities from the outsized initial ECRS prices have declined.
The saturation of all Ancillary Service markets in ERCOT has begun to take hold as the buildout of battery energy storage continues. Moving forward, this likely will result in Energy Arbitrage becoming the dominant strategy in both actual and per-cycle revenues.