06 May 2024
Avery Dekshenieks

ERCOT: Battery energy storage revenue breakdown - Jan/Feb 2024

Modo Energy’s ERCOT BESS index represents average battery energy storage revenues. And, across January and February 2024 (the last two full months for which ERCOT market disclosure data exists), batteries listed on the index made around $55,000/MW (annualized).

These revenues were 52% higher than they were during the same two months in 2023.

Head to this article to learn more about 2023 battery revenues.

When split out by month:

  • January’s revenues equated to around $92k/MW/year,
  • and February’s equated to around $16k/MW/year.

Benchmarking Pro ERCOT subscribers will learn:

  • How much individual assets earned in January and February 2024.
  • Which strategies were most lucrative.
  • And which battery energy storage owners were most successful in January and February.

Winter Storm Heather led to the bulk of battery energy storage revenues in January and February

ERCOT issued a Weather Watch for January 15th to January 17th, due to expected cold weather - courtesy of Winter Storm Heather. During those three days, batteries earned 74% of their overall revenues from January and February 2024.

Head to this article to read more about the battery energy storage response to Winter Storm Heather.

85% of battery revenues in January and February came from Ancillary Services

Across January and February 2024, batteries participated heavily in Ancillary Services, earning 85% of their revenues from these markets.

Historically, battery energy storage revenues have been dominated by Ancillary Services - particular Regulation Up and Down, and Responsive Reserve (RRS).

In June 2023, ERCOT launched its Contingency Reserve Service (ECRS). As fewer assets were qualified to provide this new service, and the overall capacity requirements were relatively large (compared to, say, Regulation), this resulted in high clearing prices, and significant battery revenues.

Over time, with more battery capacity coming online, we’ve seen Regulation become a less important part of the revenue stack.

As the amount of operational battery capacity increases, these Ancillary Services will become saturated - pushing prices down. And, as this happens, battery energy storage systems will start to earn a larger proportion of their revenues from Energy arbitrage.

We saw this in a big way in February - revenues from Energy accounted for 40% of battery earnings.

However, this is also due to flat Ancillary Service prices throughout the month. February revenues were the lowest they’ve been (across a month) for 14 months.

How does battery duration impact this revenue breakdown?

Both shorter-duration and longer-duration battery energy storage systems earned a majority of their revenues from Ancillary Services in January and February.

However, shorter-duration systems earned 36% of their revenues from Regulation services, while longer-duration systems earned 43% of their revenues from Responsive Reserve.

Head to this article on battery cycling to read more about why systems of different durations are more suited to certain Ancillary Services.

Below, Benchmarking Pro ERCOT subscribers will learn how much individual assets earned in January and February 2024 - and which strategies were most lucrative.

You can also compare the revenues and operational strategies of multiple portfolios, grouped by owner.

Which operational strategy was most lucrative for batteries in January and February 2024?

Across these two months, ECRS and RRS strategies were the most successful - in terms of overall revenues ($/MW/year). Batteries that performed ECRS- or RRS-dominant strategies earned over 2.5x more revenue (on average) than batteries with Energy-focused strategies.

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