Battery energy storage revenues in Great Britain averaged £39k/MW/year in July. Excluding capacity market revenues this equated to £2,400/MW for the month, but some batteries earned up to 70% more than this. In this article, we look at the optimization strategies of three batteries that performed the best in July.
In our monthly market update, we discuss battery revenues including Capacity Market earnings, on a £/MW/year basis. For monthly battery operations updates, we will discuss revenues excluding the Capacity Market. That’s because Capacity Market revenue is not impacted by operational strategy.
Revenues and cycling were closer linked for two-hour systems than one-hour batteries
Two-hour battery revenues showed a strong relationship to cycling in July. The highest-earning battery in July was Hawkers Hill (Tesla, 20 MW). It was the only two-hour system to perform more than 1.5 cycles per day, cycling more than 1.7 times per day. This was 70% more than the average of 1 cycle per day for two-hour assets.
This helped Hawkers Hill outperform the two-hour BESS index by 55% in July.
Little Raith was the second-highest earning system, outperforming the index by 33% earning £3.6k/MW. It cycled 28% more than average, meaning it earned revenues from its cycles more efficiently than Hawkers Hill.
The link between cycles and revenues was less strong for one-hour batteries. Capenhurst 4 was the top-earning one-hour battery in July, generating £3k/MW, 36% higher than the one-hour BESS index. Capenhurst 4 performed an average of 1.5 cycles per day, 26% more than the average for one-hour systems. It earned the most revenue per cycle of all one-hour systems.
One-hour batteries prioritized Dynamic Containment, while two-hour batteries mixed their strategies
Batteries' operational strategies can be visualized through their power allocations in different markets. Essentially, how much of their available power did they commit to different markets, on average.
On average, one-hour batteries allocated 50% of their power to Dynamic Containment High and Low services, although some systems did deviate from this. Two-hour batteries followed a range of strategies, with a greater focus on Dynamic Regulation High and wholesale trading on average than one-hour units.
Hawkers Hill, Little Raith, and Capenhurst 4 demonstrated that there are multiple strategies available to battery operators that improve battery revenues.
Hawkers Hill increased its cycles in July to increase revenues
In July, Hawkers Hill performed an average of 1.7 cycles per day, a 30% increase over its cycling in May. With similar market conditions and battery revenues in both months, this increase in cycling resulted in a revenue uplift of 41% from May.
Most two-hour batteries reduced their cycles throughout the month as wholesale trading opportunities reduced. Meanwhile, Hawkers Hill increased their cycling mid-month instead.
Hawkers Hill increased its cycling by reducing Bid prices for Dynamic Regulation High and allocating more of its power to the service than any other batteries. This meant it imported more energy through the service, that it could subsequently sell on the wholesale market and in the Balancing Mechanism.
Capenhurst 4 prioritized high-value Dynamic Regulation to boost revenues
Capenhurst 4 combined Dynamic Regulation High with wholesale exports in the first week of July. This shifted to Dynamic Containment High and Low for the remainder of July as Dynamic Regulation High fell in value. This meant it allocated its power in a similar way to a typical one-hour system in July.
Despite following a similar strategy to most other one-hour systems on average, Capenhurst 4 earned more revenue by picking up only higher-value Dynamic Regulation High contracts.
It did this by bidding at higher prices in Dynamic Regulation High than most other systems. This meant it picked up high-value Dynamic Regulation High contracts mostly in the first week of the month.
Dynamic Regulation High provides value by being a cheaper way to import energy than buying it on wholesale markets. However, in July, as wholesale prices increased, the value provided by a Dynamic Regulation High contract fell. Capenhurst 4 was contracted for more of the high-value Dynamic Regulation High contracts seen earlier in July.
Little Raith used a Balancing Reserve strategy to complement Balancing Mechanism revenues
In July, Little Raith earned £1,000/MW from Balancing Reserve, twelve times the average. Its bidding strategy in Balancing Reserve meant it was contracted for more volume in the evening peak when prices increased. This pricing behavior is driven by competition from other units, primarily gas peakers.
Balancing Reserve is stackable with dispatches in the Balancing Mechanism. This means batteries can earn revenue from both revenue streams with the same power allocation. Following a Balancing Reserve strategy meant Little Raith was highly active in the Balancing Mechanism.
Relative to its energy capacity, Little Raith was dispatched for more Bids than 97% of batteries and more Offers than 84% of batteries. Revenue earned in the Balancing Mechanism for all batteries in July was very closely linked with the volume of energy provided, suggesting batteries are dispatched at relatively similar prices.
However, Balancing Mechanism revenue can be stacked with Balancing Reserve revenue. This means Balancing Mechanism activity can be compared with combined revenues from both services. When Balancing Reserve is included, Little Raith earned significantly more than other batteries from Balancing Mechanism-related activities.
Variation of strategies demonstrates the options available to optimizers
Each of these batteries followed completely different strategies, which shows there are currently multiple ways to optimize a battery. Location is increasingly becoming a factor in how much revenue batteries can earn.
Ultimately, these three batteries earned the highest revenues as they found the right balance with their bid prices in ancillary services whilst stacking other actions. But with the fluctuating market conditions seen in recent months, that balance could shift in August.
To find out about how market conditions drove revenues last month head to our July Monthly roundup report.