Quarter two of 2024 provided some promising signs for battery energy storage in Great Britain, following on from the worst three months of revenue on record. The quarter saw improved trading opportunities, growing Balancing Mechanism utilization, new revenue streams, and a record tolling arrangement for batteries between Gresham House and Octopus Energy.
Here are the main headlines from battery operations between April to June 2024.
1. Battery energy storage revenues increased by 27% on average
The GB BESS Index averaged £50k/MW/year in Q2 2024, up 27% from the low of £39k/MW/year in the first three months of the year. This figure represents the average revenue of Balancing Mechanism-registered batteries in Great Britain.
The recovery in revenues was similar for battery energy storage of all durations. The one-hour index increased 28% to £44k/MW/year on average, while the two-hour index increased 25% to £62k/MW/year on average.
The revenue increase was across each of the three major revenue streams, with higher wholesale spreads and improved utilization in the Balancing Mechanism the main drivers.
To learn more, read our latest Benchmark update here.
2. 70 hours of negative prices occurred - with 53 in April alone
Q2 2024 saw a surge in negative pricing in Great Britain (and in Europe). Across the quarter there were 70 hours of negative pricing, taking the total for 2024 to 83. This compares to 107 hours experienced through all of 2024.
High wind generation in the first two weeks of April led to 53 hours of negative pricing alone. This was followed up by a further 17 hours in June. Further occurrences of negative pricing in July mean that we are now at 98 hours total in 2024.
To learn more, check out our deep dive from April here.
3. Balancing Mechanism utilization improved by 59%
The in-merit dispatch rate for battery energy storage improved to 10.2% across the three months of Q2, up from 6.4% in Q1. This represents a relative increase of 59% in the utilization of battery energy storage. This was reflected in dispatched battery volumes, which increased y% to x per day on average.
The improvements in dispatch rate followed improvements made to battery dispatch by the ESO in Quarter 1. Bulk dispatch was introduced for batteries in January, following the launch of the Open Balancing Platform in December 2023.
The 30-minute rule was introduced in March, enabling batteries to be dispatched for up to 30 minutes rather than the previous 15 minutes, allowing batteries to participate in the new Balancing Reserve service.
To learn more about the impact of the 30-minute rule, check out our deep dive from May here.
4. Constraint management actions from battery energy storage also increased - by 133%
The 30-minute rule change made a noticeable difference in how battery energy storage was used for constraint management. In Q2 2024, batteries saw a 133% increase in system-flagged Bid volume versus Q1. These flagged dispatches represent turn-down actions taken for constraint management.
June 2024 saw a new record of 7.3 GWh for total system-flagged Bid volume dispatched to batteries, a 58% increase over the previous record set in April.
Battery energy storage systems in Scotland have been the biggest beneficiaries of the shift - especially those in North Scotland. System-flagged Bid volume in the North of Scotland represented 65% of the total dispatched to batteries.
To learn more, read our deep dive on constraint management from June here.
5. Balancing Reserve showed its value to batteries in May
Balancing Reserve was launched in March. This new service provides the ESO with a way to secure reserve at the day-ahead stage. Batteries have been one of the main technologies participating in the service since its launch, and some systems have managed to use it to their advantage.
Average battery energy storage revenues fell 33% in May, however some batteries were able to use Balancing Reserve to limit the impact. The top-performing one-hour and two-hour batteries in May both used a Balancing reserve-heavy strategy, with 22% and 30% of their revenues coming from the service, respectively.
To find out more, read our deep dive on Balancing Reserve from May here.
Other research highlights from Q2
Benchmarking Pro
- The landscape of BESS suppliers in GB
- The 2024 battery pipeline update
- The cost of skipping battery energy storage