On the night of August 20th, Real-Time prices in ERCOT reached their highest point of the summer thus far. Alongside these high prices, battery energy storage set an all-time record for net output.
ERCOT experienced its highest Real-Time prices since May 8th of this year.
The Bus Average Hub 15-minute settlement price peaked at $1,585/MWh between 7:45 and 8:00 PM. And 5-minute prices, represented by System Lambda, peaked at just shy of $3,000/MWh at 7:45 PM.
This also contributed to the highest projected battery revenues since late May. Modo projects battery energy storage systems earned an average of $279/kW, annualized, over the course of August 19th.
On August 20th, Bus Average Hub 15-minute settlement prices peaked at the offer cap of $5,000/MWh.
This occurred for multiple intervals between 7:30 and 8:30 PM.
Ultimately, this translated to even higher revenues for battery energy storage than the 19th. In fact, the estimated average revenues of $3.39/kW, or $1,236/kW annualized, would be the 3rd-highest revenue day of the year, behind only May 8th and January 16th
What caused high prices on August 19th and 20th?
High prices arose through a now well-established pattern.
August 19th and 20th were the hottest days of the year for much of the state, meaning demand peaked at nearly 86 GW in the afternoon. On the 20th, a new record for instantaneous demand - 85,931 MW - was set at 4:45 PM.
But high demand alone doesn’t necessarily translate to high prices.
Alongside high demand, wind generation was relatively low. In the August version of ERCOT’s Monthly Outlook for Resource Adequacy, the expectation was that during the highest-risk hour for a reserve shortage, there would be nearly 14 GW of wind generation available.
On August 19th, just under 9 GW of wind generation was available to the system during the price peak. On August 20th, this was just over 8 GW.
This meant that higher-priced generation was needed to serve demand during the period of the day when the sun was setting, but demand was still high.
Another factor contributing to high wholesale prices during the event was that ERCOT did not deploy any of its ancillary services.
This was despite the fact that five-minute dispatchable capacity declined to a minimum of 333 MW during the price peak at 7:45 PM, the lowest figure observed in all of 2024.
In fact, the low point on May 8th was 400 MW higher than on August 19th.
This may indicate that ERCOT has changed its stance to be less aggressive when deploying ECRS. However, it’s more likely that simply none of the deployment triggers for the Ancillary Service were met.
For instance, Physical Responsive Capability remained above healthy levels of more than 5 GW. This also would mean that the Power Balance was not violated to a level that would require a deployment, and ERCOT anticipated having enough dispatchable capacity already online (and available to the economic dispatch) to meet any forthcoming changes in net load.
Modo subscribers can read the rest of the report below to learn:
- How much revenue batteries are projected to have earned in 2024, on average, after the 19th.
- How revenues might shape up in the rest of 2024.
What did battery energy storage revenues look like on August 19th and 20th?
According to the Modo Nowcast, batteries earned an average projected $279/kW, annualized, on the 19th. This translates to actual revenues of $763/MW, or $0.76/kW. On the 20th, they earned an estimated $1,236/kW annualized. This equates to $3.39/kW, or $3,387/MW in actual revenues.
August 20th was the largest single day of revenue for battery energy storage of the summer so far, and the largest since unseasonably warm weather and high thermal resource outages meant ultra-high revenues on May 8th.
Revenues on the 19th and 20th were earned primarily via Energy Arbitrage in the Real-Time Market. This was because Real-Time prices during the evening peak were substantially larger than Ancillary Service clearing prices.
Clearing prices for RRS, ECRS, and Regulation fell between $261/MW/h and $316/MW/h at their peak between 7 and 8 PM on the 19th. This was between 62 and 69% less than the average Energy price in Real-Time between 7 and 8 PM, which was $833/MWh.
On the 20th, this disparity was even larger. Clearing prices for RRS, ECRS, and Regulation fell between $423/MW/h and $498/MW/h at their peak between 7 and 8 PM. This was between 90 and 92% lower than the multiple intervals of $5,000/MWh settlement prices observed across the system between 7:30 and 8:30 PM.
This disparity is part of the reason why more batteries are pursuing Energy as a key revenue stream, and why batteries set an all-time record in net output of nearly 3.9 GW at 7:50 PM on the 20th.
Total revenues for the average battery in ERCOT over August 19th and 20th are estimated to have been $4.15/kW, or $4,150/MW.
For frame of reference, Modo estimates that the average battery earned $5,225/MW across the entirety of June and July.
Ultimately, this has meant that the last two days have raised Modo’s projection of annualized revenues for the average battery in ERCOT in 2024 by 10%.
Through August 18th, the average battery energy storage system had earned a projected $60,270/MW, or $60/kW, annualized. Two days later, Modo estimates that annualized revenues have now risen to $66,254/MW, or $66/kW.
This would be a 66% decrease from 2023, when batteries in ERCOT averaged revenues of $194/kW.
What about the rest of 2024?
Revenues in 2024 could still make a come-back, however.
High temperatures may not entirely be over for the summer.
Furthermore, it’s possible that the spring and fall ‘shoulder season’ periods could have increased revenue potential. This is evidenced by high power prices during unseasonably warm periods in May 2024.
Generation and transmission outages are at their peak during the 'shoulder seasons'. So, during unseasonably warm (or cold) periods, ERCOT has the potential to run into scarcity issues.
This translates to higher power prices, and more revenue opportunity for battery energy storage.