To go alongside the publication of our May 2022 Leaderboard, Robyn and Imrith discuss battery energy storage system (BESS) trends and strategies from last month. In the video below, you can see which markets helped boost the BESS revenue stack in May. You’ll also be able to dive deeper into these revenues on an asset-by-asset basis.

Leaderboard analysis

Fleet revenues

Figure 1 (below) shows the average fleet revenues for BESS assets in Great Britain (GB), from January 2020 to May 2022 (inclusive).

In May 2022, average earnings (£/MW) for BESS assets grew 12.1% from the previous month to an annualised revenue of £145,578/MW/a. This is the second-highest monthly earnings yet, second only to February 2022. This was largely driven by the high clearing prices in Dynamic Containment (DC) and Dynamic Regulation (DR), and the high accepted bids in Firm Frequency Response (FFR) in EFA 5 and 6.

Asset revenues

Figure 2 (below) shows the revenues of assets from Modo’s Leaderboard in May 2022.

Asset strategies can be split into four categories:

• Strictly FFR.
• Dynamic Containment (DC) and merchant markets.
• Hybrid (a mixture of DC, FFR, and merchant markets).
• Hybrid and DR.

Figure 3 (below) shows asset revenues for the different operational strategies taken in April 2022.

• Assets willing or able to participate in DR on average had the highest revenues (£17,988).
• Adopting a hybrid strategy of providing FFR alongside DC was more lucrative than providing either service on its own.
• The average revenue for the eight BESS assets solely providing FFR was £9,790/MW - the lowest of all four operational strategies. This is very similar to the previous month, April, where the average revenue for this strategy was £9,773/MW.

Further analysis - May markets in review

Dynamic services clearing prices

Figure 4 (below) shows the average clearing prices (volume-weighted) in DC, DM, and DR for May 2022.

• On average across the month, low-frequency Dynamic Containment (DCL) cleared at £21.09/MW/h.
• The average clearing price for providing the service symmetrically (at 90% rated power) was £22.85/MW/h in April, 10.1% higher than in April 2022.
• DR average clearing prices have dropped since the service launched last month. Average clearing prices reduced by 22.95% (-£7.38/MW/h) and 16.71% (-£5.15/MW/h) in both the high- and low-frequency services respectively.

Firm Frequency Response

Figure 5 (below) shows the accepted bids in FFR for the fourteen assets that participated in the service during May 2022 by EFA block.

• Four fewer assets provided FFR compared to last month, April 2022.
• Prices secured in EFA blocks 1-4 (corresponding to 11pm-3pm) were significantly lower than in EFA 5 and 6 (3pm-11pm): on average £8.71/MW/h vs £27.49/MW/h.
• FFR is a pay-as-bid auction, and there were significantly different bids across particularly the peak EFA blocks: with accepted bids between £40.99 and £6.12.
• Hulley Road, Lascar Works, and Red Scar were all accepted into the service during EFA 5 and 6 for over £38/MW/h. By not providing the service during EFA 1- 4, these assets were able to capture higher revenues from DC, leading to these assets being ranked in the top five for this month’s Leaderboard.

BESS activity in the BM

In May 2022, Balancing Mechanism (BM) revenues only made up 0.5% of GB BESS fleet average revenues. Figure 6 (below) shows the daily BM revenues for all BMU-registered BESS assets.

Wholesale prices

There were few instances of high intraday price spreads in wholesale markets during May 2022. This is highlighted in Figure 7 (below), which shows Nordpool’s day-ahead hourly auction. As a result, we see a few assets participating in wholesale trading on those days, contributing 12.1% of the total monthly revenues for the two Tesla two hour systems, Contego and Holes Bay.

What did success look like in May 2022?

The Modo benchmark for May 2022 was £12,622/MW for the month. Those assets making a higher return than this could be considered more successful than the average.

As seen in previous months, the most successful assets - those generating the highest revenues - were those demonstrating revenue agility. Assets able to capture the largest opportunities, per EFA block, came out on top: be that in DC and DR, supplementing with wholesale trading, or in DC and FFR where they were able to secure very profitable FFR contracts in EFAs 5 and 6.

On the whole though, it’s been a(nother) fantastically successful month for battery assets in GB: returning the second-highest monthly revenues on record! As we move into the summer months which can be as operational challenging for the system operator as the depths of winter, it will be interesting to see how the stack evolves!