In September 2024, battery energy storage systems in Great Britain earned average revenues of £37.5k/MW (annualized). This was 20% lower than in August - despite September 10th being the single highest-earning day of 2024 so far for batteries. However, one battery bucked this trend and earned higher revenues in September than it did in August - by maximizing its Balancing Mechanism availability.
Our market update discusses 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 the Capacity Market does not impact operational strategies.
The highest-earning battery performed less Dynamic Regulation High than its competitors
Wishaw was the highest-earning battery in Great Britain in September. It combined wholesale trading with Balancing Mechanism dispatches to earn 33% more than average for a two-hour system. Wishaw also had fewer costs from performing Dynamic Regulation High than other high-earning two-hour systems, as it focused on importing energy in the Balancing Mechanism.
The highest-earning one-hour batteries were Capenhurst 4 and Lascar Works, which both outperformed the one-hour index by 33%. Both assets performed more Dynamic Moderation High than any other battery, and half as much Dynamic Containment High than average.
Batteries performed 15% fewer cycles in September, causing revenue to fall
Despite the link between cycling and revenue increasing in September, batteries opted to reduce their cycling. Two-hour systems cycled 0.9 times per day, a 25% decrease from August, as lower wholesale spreads reduced the revenue potential of a cycle.
For the second consecutive month, the relationship between cycles and revenues strengthened for one-hour batteries. This follows reduced Dynamic Containment clearing prices, which decreased the value of the low cycling service.
Dynamic Containment strategies resulted in lower revenue
Dynamic Containment is a low-cycling service. This means when clearing prices are high, it can break the link between cycles and revenue, as batteries can earn more through fewer cycles. When clearing prices are low, this strengthens the relationship between revenues and cycling as batteries earn less money for cycling less. Low clearing prices in September meant batteries that focused on Dynamic Containment generated lower revenues.
Capenhurst 4 contracted 64% less Dynamic Containment High in September than in August. It replaced this with Dynamic Moderation High contracts, helping it outperform the one-hour GB BESS Index.
Wishaw imported more Balancing Mechanism energy than any other battery
Dynamic Regulation High has historically been a popular service for two-hour batteries. They use the service to import energy at a cheaper price than on the wholesale market and then sell this energy during price peaks. This means they earn revenues from a larger price spread than the wholesale market provides.
In September, four of the five highest-earning batteries followed this strategy. However, Wishaw made a change. Instead of using Dynamic Regulation High to import energy, it bought energy in the Balancing Mechanism. When normalized for rated power, Wishaw imported more energy from the Balancing Mechanism than any other battery.
84% of these Bid imports were cheaper than importing on the EPEX Intraday market. This helped Wishaw earn higher revenue by increasing the price spreads available to trade.
Wishaw earned ten times more Bid revenue than any other battery
Wishaw earned revenue while importing energy from the Balancing Mechanism in September. This is because it was dispatched for negatively priced Bids. These Bids helped Wishaw earn £6.3k/MW/Year from negative-priced Bids, ten times more than any other system.
A fifth of this Bid revenue came from system-flagged actions, which manage transmission constraints. Wishaw is located in southern Scotland, an area where transmission constraints can limit the amount of power that can flow out of it. This means it is well-placed to help manage constraints.
An example of this occurred on September 14th. Wishaw sold wholesale power during the morning and evening peaks. In the afternoon and at night, it received payments for importing Balancing Mechanism energy.
Wishaw was paid for system-flagged Bids in the late evening. During the mid-afternoon it was paid for Bids that were not system-flagged. For these actions, it was more expensive than other available Bid volume. However, it was cheaper than Bids from other units in the same region.
This suggests that these actions could have been taken as a form of constraint management but weren't system-flagged. In September, NESO also announced that it is working on improvements to its systems for managing constraints.
Wishaw had the highest proportion of Bid volume priced in-merit
Despite the high bid pricing, Wishaw remained the most competitively priced battery for bids in September. It priced its Bid volume in-merit 40% of the time. Batteries that priced their Bids in-merit more often earned more revenue in September.
This shows the value of batteries making themselves available for dispatch by NESO at a competitive price. In September, Wishaw was dispatched for bids in 22% of all settlement periods, more than any other battery.