The ERCOT BESS Index represents average battery energy storage revenues across a given timeframe.
In March 2024 (the last full month for which ERCOT market disclosure data exists), batteries listed on the Index made around $36,000/MW (annualized) on average.
These revenues were 39% lower than the same time last year.
Head to this article to learn more about 2023 battery revenues.
64% of battery revenues in March came from Ancillary Services
In March 2024, battery energy storage systems earned 64% of revenues from Ancillary Service markets.
However, they earned more than one-third of their revenues from Energy arbitrage.
Historically, battery energy storage revenues have been dominated by Ancillary Services.
As operational battery capacity increases, these Ancillary Services will start to become saturated - pushing prices down.
As this happens, battery energy storage systems will generally earn a larger proportion of their revenues from Energy arbitrage.
In March 2024, revenues from Energy accounted for 36% of battery earnings - up from 22% of earnings last year in March 2023.
How does battery duration impact revenues?
Longer-duration battery energy storage systems (>1.5 hours) actually earned 56% of their revenues from Energy arbitrage. While shorter-duration batteries earned just 19% of their revenues from Energy.
Instead, shorter-duration batteries earned 36% of their overall revenues from the Responsive Reserve Service.
This makes sense, given there’s no competitive advantage for two-hour systems in the service (due to its short response times).
However, two-hour batteries can discharge for longer during peak times. They can also enter a larger proportion of their capacity into longer-lasting Ancillary Services like ERCOT’s Contingency Reserve Service (ECRS) and Non-Spinning Reserve (Non-Spin).
This means that they can earn above-average revenues during periods when prices are less volatile, and revenue opportunities are more limited (like March).
On average, two-hour systems earned 62% higher revenues than one-hour batteries in March.
In fact, if we rank all batteries by $/MW revenues earned in March, the top eleven systems all had a duration of greater than 1.5 hours.
Which operational strategy was most lucrative for batteries in March 2024?
In March, batteries that carried out Energy-dominant revenue strategies earned 1.7x more revenue (on average) than batteries with Ancillary Service-focused strategies.