In the past few years, Texas has become one of the biggest battery energy storage markets in the world. But how much money are battery energy storage systems in ERCOT actually making?
H1 of 2023 (January to June, inclusive) was a particularly interesting period. It ended in heatwaves, extremely high prices, and the launch of a brand-new ancillary service.
All of this meant that June was especially lucrative for battery energy storage systems. Batteries made 42% more money in June than they did in the previous five months combined.
This was largely down to extremely high prices on certain days. For example, on June 20th, real-time energy prices hit $5,000/MWh.
These high prices had knock-on effects elsewhere. The average price of all ancillary services (excluding Regulation Down) during the June 20th evening peak (4pm - 8pm) was around $2,000/MW.
A new ancillary service launched in June
The ERCOT Contingency Reserve Service (ECRS) launched on June 10th. This is the first new ERCOT ancillary service to launch in more than ten years. The service is designed to solve two potential problems:
- It can be used to recover frequency following a large generation loss – as it did on June 16th, when the Comanche Peak Unit 1 nuclear plant tripped offline.
- It can provide capacity over a relatively “sustained” period (compared to faster-acting ancillary services), during times of net load uncertainty – as it did on the evening of June 20th, when solar generation fell away, and there wasn’t thought to be enough available capacity elsewhere.
Despite high energy prices, ancillary services still dominate the revenue stack
In H1 of 2023, ECRS made up 15% of battery energy storage revenues, despite only running for 21 days (11% of the six-month period).
Across the period, Responsive Reserve was still (by far) the most lucrative market for battery energy storage systems in ERCOT. And, overall in H1, ancillary services made up around 87% of battery energy storage revenues.
89% of the battery revenues from energy trades in H1 came on the real-time market – largely due to those massive June 20th prices mentioned above.
This shows the importance of providing generation at the correct time – to make the most of revenue opportunities.
There were still huge differences in the H1 revenues of individual battery energy storage systems
Although most systems have similar opportunities to make money, there is still a big difference in the revenues that individual batteries earn each month.
The BESS revenue index is simply the average earnings of all ERCOT battery energy storage systems across a given time period. It is based on the revenues that each asset earns in every 15-minute period.
In the first five months of 2023, certain systems made roughly double the average revenues of all battery energy storage systems in ERCOT.
And, in June, the highest earning asset - Key Capture Energy’s 50 MW, one-hour Endurance Park Storage system - made over $44,000/MW. This is almost equal to the overall average revenues of battery energy storage systems across the entire six-month period (January to June, inclusive).
Chisholm Grid was the highest-earning ERCOT battery energy storage system in H1 of 2023
So, which ERCOT battery energy storage systems earned the most money in H1 of 2023?
Chisholm Grid - the Astral Electricity-owned, 100 MW/125 MWh system - earned the highest revenues (per megawatt) in H1 2023.
Its revenues of $68,573/MW were 52% higher than the average - $45,046/MW. This is the average accumulated revenue of battery energy storage systems over six months.
Elsewhere, some of the more successful assets were those able to take advantage of real-time opportunities (represented by the pale purple sections of the bars) on those days when prices spiked.
And, even though Responsive Reserve provided the most revenues overall, the assets with the highest revenues in H1 tended to be those that made the most of the Regulation Up and Down services.
In fact, almost all systems that earned at or above the revenue index in H1 either relied heavily on Reg. Up and Down, or on those real-time energy price spikes.
With the heatwave causing further price spikes throughout July and August, it’ll be interesting to see how these revenues look in the second half of the year.