In September 2024, battery energy storage systems listed on Modo Energy’s ERCOT BESS Index earned annualized average revenues of $22/kW.
This was a 75% decrease from August, when batteries earned an average of $87/kW/year.
$22/kW/year also represents a 67% decrease from average revenues across the first eight months of 2024.
BESS revenues in September were down as a result of essentially no volatility in power prices. Relatively mild weather conditions meant that average demand in September was around 4.7% lower than in September 2023 - falling from 60.1 GW to 57.3 GW.
This was paired with continued solar and BESS buildout - more than 4 GW of capacity has been added of each technology type in the last 12 months. Additionally, there were minimal thermal generation outages in September - less than 9 GW for the majority of the month - as thermal resources had yet to enter the maintenance season of the later fall months.
This culminated in power price spreads that were the lowest since February. In fact, one-hour spreads for the month averaged just $63/MWh.
Despite the overall lack of volatility, September 2024 was the first month where battery energy storage systems earned a majority of their revenues from Real-Time and Day-Ahead Energy markets.
In September, batteries earned 58% of their revenues from Energy arbitrage, the highest-ever proportion.
This is because Ancillary Service prices fell to five-year lows in September, with average clearing prices of $1.93/MW/h.
The lack of volatility in the Energy markets wasn’t the sole cause of reduced Ancillary Service prices. Additionally, saturation in the markets as the installed capacity of battery energy storage systems continues to grow also has influenced Ancillary Service prices.
How did revenues differ across battery durations and individual systems?
Lower proportions of revenues coming from Ancillary Services is a universal trend across batteries of all durations. However, it is particularly noticeable for longer-duration batteries.
These systems have the inherent advantage of being able to capture large energy spreads over a longer period of time throughout the day, while still being able to reserve some capacity for Ancillary Service responsibility.
In fact, two-hour duration batteries earned higher revenues from solely Energy arbitrage than one-hour batteries earned in total, on average.
As a result, individual battery energy storage systems that prioritized Energy arbitrage generally outperformed the ME BESS ERCOT Index.
In fact, the top eight performing battery energy storage systems in ERCOT all earned 80% of their revenues, or greater, from Energy arbitrage.
If your organization has a subscription to Modo Energy’s ERCOT products, you can access the rest of the article below. Find out:
- which battery finished on top of the leaderboard in September, and why,
- how battery owner portfolios compared - both by strategy and performance,
- and how battery energy storage revenues varied by region - is the West still the most lucrative Load Zone for batteries in ERCOT?
How did individual BESS revenues vary in September?
The highest-earning batteries in September 2024 earned a majority of their revenues from Energy arbitrage.