In June 2024, battery energy storage systems listed on Modo’s ERCOT BESS Index earned average revenues of $45/kW (annualized). This is the last full month for which ERCOT’s market disclosure data exists.
This represented a 71% decrease from the previous month. May remains the most lucrative month of 2024 to date - batteries earned around $157/kW/year (on average).
Additionally, revenues were 85% lower than in June 2023 - when batteries earned a massive $309/kW/year.
It is important to caveat these year-over-year figures - June 2023 saw record-high battery revenues. This was due:
- the launch of ERCOT’s Contingency Reserve Service (ECRS),
- and record-high demand during this period.
On top of this, between June 2023 and June 2024, system conditions evolved dramatically:
- 9 GW of newly installed solar capacity meant ERCOT was more likely to have enough capacity to meet peak loads.
- 27% higher wind generation across June contributed to lower daily average Net Loads.
- And there was a 120% increase in installed battery energy storage (MW) during this period. This led to increased competition in Ancillary Services - prices were 83% lower, on average, than they were in June 2023.
This also meant that batteries turned to Energy arbitrage as a much more prominent revenue stream. In June 2024, batteries earned an average of 28% of their revenues from Energy arbitrage. This was up from just 11% in June 2023.
How did specific battery energy storage systems perform in June 2024?
Despite average battery revenues in June being lower than in 2023, there was a large disparity in the revenue performance of individual batteries in ERCOT. In fact, the top-performing battery - Madero Grid 1 (owned by Eolian) - earned $95/kW (annualized) over the month. This was more than double Modo’s ERCOT BESS Index.
Batteries that outperformed the Index in June 2024 primarily earned their revenues from Energy arbitrage and ECRS.
The top five earning battery energy storage systems in June 2024, on a per-kilowatt basis, were:
These sites have vastly different characteristics. Eolian’s Madero Grid sites (which are split into two here for reporting purposes, as per their actions in ERCOT markets, but are sited at the same location within a single fence line) are each 100 MW, 2.5-hour+ systems. In contrast, the other three assets here in the top five are all small, sub-10 MW, one-hour Distributed Generation Resources (DGRs).
The common theme is that all five sites earned more than 50% of their revenues from Energy arbitrage (and SMT Elsa earned 99% of its June revenues in Energy markets).
However, normalizing revenues on a per-kilowatt basis tends to favor longer-duration batteries. Therefore, it’s also important to understand how batteries performed on a per-kilowatt-hour basis.
The two notable outliers in this graph are:
- Blue Summit (NextEra Energy),
- and Notrees (Duke Energy).
These sites have respective durations of 0.42 hours and 0.35 hours - and both earned the entirety of their revenues in June from Regulation services.
In fact, the top 47 earning sites, on a per-kilowatt-hour basis, were all batteries with a duration of one hour or less. Endurance Park (Key Capture Energy, 50 MW) was the highest-performing two-hour system in June.
How did duration impact battery revenues in June 2024?
In June 2024, two-hour battery energy storage systems earned 22% higher revenues, on average, than their one-hour counterparts.
On average, two-hour systems earned double the revenues (per-kilowatt) from Energy arbitrage that one-hour systems earned. They also earned more than 50% higher revenues from ECRS.
And the proportion of revenues from each of these markets differed dramatically depending on duration.
Two-hour battery energy storage systems, on average, earned 84% of their revenues from Energy arbitrage and ECRS. Revenues for one-hour systems, on the other hand, were more evenly spread.
How did owner portfolios perform in June 2024?
Despite lower overall battery energy storage revenues in June 2024, some large owner portfolios comfortably outperformed the Index.
In June 2024, the highest-performing owner, Eolian, earned an average of $77/kW/year across its battery energy storage portfolio.
Other owners who had a (relatively) successful June included:
- Jupiter Power,
- Gore Street Capital,
- Hunt Energy Network,
- SMT Energy,
- and Key Capture Energy - which had the three highest-earning battery energy storage systems in May.
Each earned more than two-thirds of their revenues from a combination of Energy arbitrage and ECRS.
Additionally, owners that focused some of their energies into Non-Spinning Reserve also outperformed the Index.
This increasingly lucrative Ancillary Service has grown in popularity. It allows battery energy storage systems to earn outsized revenues during specific time periods.
This is especially apparent during spring months (April to June) - when large thermal resources are often on outage. This decreases competition to provide the service.
In May 2024, Non-Spin accounted for 10% of all battery energy storage revenues - and, in May 2023, it accounted for 7%. Though these opportunities are largely seasonal, Non-Spin remains a source of revenue potential for batteries as other Ancillary Services become increasingly saturated.
How did system conditions in June 2024 impact battery energy storage revenues?
The 85% year-on-year decrease in revenues from June 2023 to June 2024 was the result of a variety of factors:
- The rapid buildout of battery energy storage systems and solar generation.
- Increased wind generation across peak Net Load periods of the day.
- Lower average peak temperatures - resulting in minimal year-over-year demand growth.
Average peak demand in June 2024 was 74.2 GW (at 5pm). This was 2.1% higher than in from June 2023 (72.7 GW).
Despite this growth in overall demand, average peak Net Load dropped by 1.7% in June 2024 - from 53.6 GW to 52.7 GW.
This is largely due to wind generation in June 2024 being 27% higher than in June 2023.
With Net Load decreasing (despite greater demand), ERCOT did not need to rely on overpriced generation during its Net Load peaks. This translated into reduced power prices across the month.
Additionally, the total installed rated power of battery energy storage systems grew 120% in the twelve-month period. This led to increased competition in Energy and Ancillary Service markets - driving prices down, and squeezing revenue opportunities.
What do battery energy storage revenues look like in 2024 so far?
Using Modo Energy’s ERCOT BESS Index “nowcast”, we can benchmark battery performances up to the present day.
Through September 10th 2024, we estimate cumulative average battery energy storage revenues so far this year to total $43/kW (year-to-date). These revenues represent less than a quarter of the $177/kW that battery energy storage systems in ERCOT had earned this time last year.
What do these evolving market dynamics mean?
Overall, battery energy storage revenues in June 2024 were much lower than they were in June 2023. Evolving market conditions are making it more difficult for batteries to earn the outsized revenues they once did.
To see our full analysis of ERCOT battery revenues in the first half of 2024, head to the H1 2024 Benchmark Report.
As always, check back in with us next month to see how batteries performed in July.