In October 2024, battery energy storage systems listed on Modo Energy’s ERCOT BESS Index earned annualized average revenues of $42/kW.
These revenues were 34% lower than the average revenues for the previous nine months. However, this was an 88% month-over-month increase from September, when batteries earned an average of $22/kW/year.
Average revenues increased both in Energy arbitrage and in each of the Ancillary Services.
However, 52% of the month-over-month increase in revenues came from Energy arbitrage across the Day-Ahead and Real-Time Markets.
Naturally, higher revenues were the result of higher prices - and therefore spreads - in October relative to September.
October's daily average prices peaked around $114/MWh, 32% higher than September's peak of $87/MWh.
What led to increased revenue opportunities for battery energy storage systems from September to October?
Average renewable generation increased by 27% from September to October, while average demand decreased by 7%. This resulted in a 17% decrease in average net load. Often, decreased net load tends to result in lower average prices, meaning decreased revenue opportunities for battery energy storage systems.
However, as seen previously, peak prices in October were actually 32% higher, on average, than in September.
This is because, in October, prices often rose to higher levels than they did in September at the same level of net load.
For instance, there were eight settlement periods in October when the Bus Average Hub price rose above $100/MWh while net load was lower than 50 GW.
Conversely, this never happened in September. All of the settlement periods where prices rose above $100/MWh occurred when net load was higher than 50 GW.
Thermal generation outages offset the decrease in net load, raising prices
Thermal generation resources require regular maintenance on an annual basis. Generally, this maintenance is scheduled during the “shoulder months” in the Spring and Fall. This is when grid demand is lower, and therefore, so is operational uncertainty.
Generally, ERCOT does not accept planned resource outages through the end of September. This is to avoid having generation out-of-service that could have been available on a hot, high-demand day.
As October began, thermal generation resources were able to begin their planned maintenance. Throughout the month, there was an average of 17.3 GW of outaged thermal generation capacity. This was a 141% increase from the September average of 7.2 GW.
By the end of October, nearly 23 GW of capacity was out of service on some days.
When more generation is out of service, generation with more expensive offers to provide Energy is dispatched at relatively lower levels of demand.
This then results in higher prices at comparable levels of demand seen in months with less generation on outage.
Subscribers to Modo Energy’s ERCOT products can access the rest of the article below. Find out:
- which batteries earned the highest revenues in October,
- how battery energy storage owner portfolios compared by performance,
- how BESS revenues varied by region - was the West still the most lucrative Load Zone for batteries in ERCOT?
Which revenue streams did battery energy storage systems prioritize in October?
For the second consecutive month, battery energy storage systems in ERCOT earned a majority of their revenues from Energy arbitrage.
In October, Real-Time and Day-Ahead Energy revenues combined for 55% of total battery energy storage revenues.