Co-locating a battery energy storage system with a wind or solar site has a number of benefits. It means power can be stored when the wind is not blowing or the sun is not shining. Co-location also presents a unique arbitrage opportunity. The battery can charge up using excess (or curtailed) renewable power, and discharge onto the grid when prices are high.
But what are co-located battery energy storage systems in ERCOT actually doing? What do their revenues look like? And how could wind and solar sites benefit from co-locating a battery?
How do co-located battery energy storage revenues compare to standalone systems?
In general, co-located battery energy storage systems in ERCOT earn lower revenues than standalone systems.
- In the first four months of 2024, standalone grid-scale batteries in ERCOT earned an annualized $65,000/MW (on average).
- Batteries co-located with wind or solar sites earned 52% less during the same period - an average of $32,000/MW/year.
![](https://images.storychief.com/account_26864/picture2_c9eff8a71f6bdbdf34573478243b1734_800.png)
In fact, every single co-located battery in ERCOT underperformed the Modo BESS Index during this period. (The ERCOT BESS Index was around $55,000/MW/year, from January through April 2024.)
![](https://images.storychief.com/account_26864/cl-revenues_4f600ef4a0265c72911d628d5d8f3fef_800.png)
Want to create your own custom indices - like the one above?
If you’re a Modo subscriber, you can now create your own custom index - like the one above. Just select the batteries you want to track and compare. For this analysis, we simply selected every co-located battery energy storage system on the Modo BESS Index.
![](https://images.storychief.com/account_26864/image-199_1424899390fb8c15823bb5e86fc7c189_800.png)
Alternatively, filter assets on the Modo BESS Index by duration, location, and owner. Create in-depth benchmarks you can easily share with your entire team.
Check out the video below to learn how to use this new feature.
To build your own custom indices now, head to the Indices page.
How do co-located battery energy storage systems operate, compared to standalone systems?
It’s not really fair to simply compare the revenues of standalone and co-located batteries. The purpose of co-located battery energy storage is to optimize the cumulative performance of both the battery and the generation resource (wind or solar, in most cases).
Co-located battery energy storage systems can help to mitigate the opportunity costs associated with curtailment.
Curtailment occurs when a generation resource is instructed to turn down, derate, or shut off entirely - because there is an excess of power on the grid. With a co-located battery energy storage system, this lost output can instead be diverted to charge the battery. The battery can then discharge later, when prices are higher - to earn revenues.
Because of this, the daily charge and discharge behavior of co-located batteries differs from that of standalone systems.
![](https://images.storychief.com/account_26864/charge-discharge_f55e54df8d738d62990e76223d4e03f1_800.png)
While the general shape is the same among all battery energy storage systems, their charge and discharge levels differ at certain times:
- Standalone batteries tend to charge more overnight, and then discharge a higher proportion of their power in the morning (roughly between 6am and 8am).
- The charge/discharge shape for batteries co-located with wind sites is much flatter throughout the day.
- Batteries co-located with solar have the largest average within-day spread between their peak charge and peak discharge. They charge heavily during mid-morning (when solar generation tends to peak) - and then discharge heavily later, as solar generation ramps down.
Modo Energy’s ERCOT subscribers can check out the rest of the article below. Read on to find out:
- Which markets and services do co-located battery revenues come from?
- What are the revenue opportunities that co-located batteries provide - based on case studies of actual wind and solar sites in West Texas?
Which markets and services do co-located battery energy storage revenues come from?
From January through April 2024, standalone batteries earned 73% of their revenues from Ancillary Services. Revenues came from a well-balanced combination of Responsive Reserve (RRS), Contingency Reserve (ECRS), and Regulation services.
During the same period, co-located batteries earned more than half of their revenues (52%) from Responsive Reserve - and .