Modo Energy’s indices have become a cornerstone for asset owners, operators, banks, and policymakers. In 2022, we released the Modo Energy GB BESS Index - a trusted benchmark for tracking energy storage asset performance in Great Britain.
Earlier this year, we launched our first North American indices - in ERCOT and CAISO. In 2025, we will add more indices across the USA, Europe, and Australia.
As markets evolve and the energy storage community globalizes, so do the Modo Energy indices.
Today, we're launching V3.0 of our indices with a new name - the ME BESS indices. This name change represents a major leap forward in accuracy, transparency and standardization.
Today, we’re also announcing computational changes to the ME BESS GB Index, with a range of enhancements including:
- Wholesale revenues - Improved approach for calculation.
- Imbalance settlement - Improved approach for calculation.
- Virtual BMUs - Inclusion for more comprehensive performance tracking.
- Frequency response services - Integration of real-time frequency data into dispatch calculations.
- Quick Reserve - Inclusion in index.
This article will discuss the changes to the methodology behind the ME BESS GB Index and how they impact revenue figures.
1) The new ME BESS GB Index will include intraday wholesale revenues
Currently, BESS revenues from wholesale markets are calculated by multiplying a battery’s Physical Notification (PN) and the wholesale power price. The price is an average of the N2EX and EPEX day-ahead hourly price.
The new ME BESS GB index will include wholesale revenue earned in the EPEX continuous intraday market. This revenue is calculated by multiplying the PN by the RPD HH index of the EPEX intraday market. This price is an average of all the intraday trades made for delivery in that half hour.
To determine whether a trade has been made on the intraday or day-ahead market, we use the battery’s PN. We continuously monitor the duration of PNs and if they remain the same for an hour, starting on the hour, we assume this is a day-ahead trade—as these markets are hourly. If the PN changes from one 30-minute period to the next, these are taken as intraday trades.
This change results in battery wholesale revenues increasing by less than £400/MW/year across 2024. However, this ranges from a £3.5k/MW/year uplift to a £2.2k/MW/year reduction for individual batteries.
In 2024, Coventry is one of the highest-earning batteries in our previous index - and it receives one of the largest wholesale revenue uplifts with the new ME BESS GB index. Its wholesale revenues increase by £2.4k/MW/year. This revenue uplift tends to come on days when intraday prices spike higher than day-ahead prices, like on October 14th this year.
Intraday prices can be more volatile than day-ahead prices
On October 14th, Intraday prices on the EPEX continuous market were over three times higher than the day-ahead market at 6 p.m. This means batteries that sold power in the intraday market would have earned much more revenue than those that sold it in day-ahead markets.
With the new ME BESS GB index methodology, Coventry’s exports during the evening demand peak would be calculated using the intraday wholesale price. This is because its PNs changed every half hour. This change means Coventry earned 3.5 times more wholesale revenue in the new ME BESS GB index on this day vs the old index.
2) Tracking Imbalance revenues for all batteries
The new ME BESS GB index includes imbalance revenues for all batteries (previously it only included non-BM registered assets). Batteries earn imbalance revenue based on the difference between their contracted and actual power output, known as being ‘out of position’. If a battery under-delivers power vs its contracted position, it must pay imbalance charges. The System Price determines how much batteries pay per MWh. If a battery over-delivers power, it can earn revenue if the system price is above £0/MWh.
To determine whether an asset was out of position, its PNs (the position it indicated to NESO) with its actual metered data (submitted to Elexon). Imbalance is based on an asset’s metered position compared to its contracted position - however as we have no visibility of an asset’s contracted position, we use the PN position as a proxy. If an asset is out of position as a result of delivering balancing services (Applicable Balancing Services Volume Data - ABSVD, or due to Balancing Mechanism actions), we exclude this volume from the imbalance calculations.
ABSVD includes a battery’s output in frequency response services like Dynamic Regulation High.
Adding imbalance from all BESS assets has reduced battery revenues in the ME BESS GB index by £662/MW/year in 2024 vs the old index.
3) Virtual BMUs have been added to the index
Previously, Secondary BMUs (often called virtual, or vBMUs) were excluded from the index as we could not calculate their imbalance revenues. However, Modo Energy now receives detailed metered data from Elexon, which means vBMU revenues can now be accurately represented, and are now included in the Index.
Imbalance revenues have a significant impact on vBMU revenues. This is because they do not receive ABSVD, so their imbalance volume is calculated by taking their metered data from their PN and Balancing Mechanism actions. This typically means their imbalance volumes are larger than standard BMUs.
This difference impacts how vBMUs are optimized. Their revenue strategy often involves importing wholesale energy, and then providing Dynamic Regulation Low. vBMUs do not receive ABSVD and therefore keep the imbalance revenue generated by exporting whilst delivering Dynamic Regulation Low. This means vBMUs tend to avoid Dynamic Regulation High, and favor Dynamic Regulation Low.
This strategy means vBMUs earn high imbalance revenue and have high wholesale costs. As a result, adding vBMUs to the ME BESS GB index slightly skews wholesale and imbalance revenues.
Impact: The new ME BESS GB Index results in 2% higher revenues in 2024
In 2024, the new ME BESS GB index has risen from £47.9k/MW/year to £48.7k/MW/year. Most of these changes are a result of vBMUs being added, boosting frequency response, Balancing Mechanism, and imbalance revenues.
Comparing the new ME BESS GB index without vBMUs to the previous index shows how the change results in a small increase in wholesale revenues. Other markets see small changes in revenue due to some updates to our asset database, which impacts the per MW figure reported by the ME BESS GB index. These changes mean the ME BESS GB index can be updated as soon as we are notified of a new battery coming online, without any downtime on the Modo Energy Terminal.
4) Live frequency data for frequency response throughput
In addition to the changes to the index revenue, we have also improved our estimates of energy throughput as a result of delivering frequency response services. Previously, due to limitations in data availability (NESO publishes grid frequency data at the end of the calendar month), we used the frequency data from the same day in the previous year (as a proxy) to produce live estimates of energy throughput. In the new ME BESS GB index, we incorporate live frequency data. Now, actual energy throughput of batteries in frequency response is available on the Terminal.
5) Quick Reserve is live
Today (3 December 2024), the Quick Reserve service has launched and is available to Balancing Mechanism Registered assets. To read more about Quick Reserve - please see this article providing details of the service.
The new service is incorporated into the ME BESS GB index and is available on the Terminal.
