Battery energy storage revenues reached £46k/MW/Year in August. This was helped by record Balancing Mechanism revenue, and is the highest figure since November 2023. The highest-earning one-hour battery performed no frequency response services in August, the first time this has ever happened.
In our 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 operational strategy does not affect Capacity Market revenue.
Balancing Mechanism revenue helps batteries top the leaderboard
Minety Upper was the highest-earning one-hour battery in August, outperforming the one-hour BESS Index by 25%. It is the first system to top the monthly leaderboard while performing no ancillary services.
Meanwhile, Hawkers Hill was the top-performing two-hour battery this month. Common across both systems were the highest cycling rates for their respective duration. Both systems earned the highest Balancing Mechanism revenues too.
Elsewhere, two batteries from Northern Scotland also featured in the top 5 performing one- and two-hour systems this month. These batteries earned negative Balancing Mechanism revenue but much higher wholesale revenues than batteries elsewhere in GB.
High cycling helped both systems outperform the market
Hawkers Hill was the highest cycling two-hour asset in August, as cycling and revenues remained closely correlated for these batteries. Jamesfield 2, the 3rd best-performing battery, earned the highest revenue per cycle this month.
The link between cycling and revenues strengthened for one-hour batteries in August, after a weaker relationship in July. Minety Upper was the highest cycling battery in August, helping it earn the most revenue of all one-hour systems.
Increased Offer dispatch volume and overall Balancing Mechanism revenue were key to the stronger relationship between cycling and revenues.
High Balancing Mechanism revenue helped batteries outperform a Dynamic Containment strategy
As demonstrated in July, Dynamic Containment can limit the uplift one-hour batteries receive from increasing cycling. Typically, bids for the service are linked to wholesale trading value, which can accurately be predicted a day ahead.
However, bids for the service have not yet begun to reflect the value that batteries could receive in the Balancing Mechanism. Therefore, as Offer volume and Balancing Mechanism revenues rose to record highs in August, Dynamic Containment prices did not rise in line with this increased value. This meant batteries cycling more in the Balancing Mechanism in August outperformed those heavily contracted in Dynamic Containment.