10 Jan 2023
Flora Biggins

Signal vs. the Benchmark: December 2022

With December’s battery fleet benchmark now available on the Modo platform, how do the projected figures in Signal compare to actual revenues?

In this article, we’ll be taking a look at:

  • How our Signal projection compared to the Revenue Benchmark for December
  • Where and why the Signal numbers hit and missed their mark
  • How Signal coped with the first month that wholesale revenues made up a bigger slice of the pie than Dynamic Containment revenues

So without further ado, let’s jump in and see how Signal performed against the December benchmark.

How accurate was Signal?

Figure 1 (below) compares the estimated value for August - December 2022 against our median Revenue Benchmark.

Figure 1: Signal battery revenue projection as compared to actual fleet revenues.
* Forecast values taken from October 2022 Signal update
† Forecast values taken from December 2022 Signal update
  • The actual revenue benchmark for December 2022 is £134k/MW/a (annualized). This is an increase from the previous month, which fell outside Signal’s predicted range of revenues for the second consecutive month.
  • This is only 7% lower than Signal’s p50 value of £143k/MW/a and sits confortably within the uncertainty bands given by the p90 and p10 values.

So how do forecast and actual revenues measure up across the different markets?

Battery energy storage revenues by market

Figure 2 (below) compares the mean battery revenue breakdown and Signal p50 revenues across the different markets.

Figure 2: Breakdown of the revenue stack for each of the markets for Signal and the Revenue Benchmark in December 2022.
  • Both Dynamic Containment and Dynamic Regulation revenues were overpredicted by Signal this month. In contrast, FFR revenues were underpredicted by 19%.
  • However, wholesale revenues were consistent with predictions, differing by 2%.
  • Signal predicted Dynamic Containtment to be the largest source of revenue in December. However, for the first time ever, wholesale was the most lucrative market, comprising £41k/MW/a.

So why did Signal over-predict Dynamic Containment revenues, and why was wholesale the most lucrative market? Let’s take a closer look at the daily Benchmark revenues over December 2022.

A closer look at the daily Benchmark

Figure 3 (below) shows daily Benchmark revenues split up by market in December 2022.

Figure 3: Daily Benchmark revenues split up by market, shown for December 2022.
  • On the 12th of December, huge price spikes in day-ahead markets led to extremely large wholesale revenues (5.6 x higher than the day with the second biggest wholesale profits).
  • In a saturated Dynamic Containment (DC) market, with limited days of wholesale opportunity (particularly after the snows melted in the run-up to Christmas!), the opportunity cost for storage to provide DC was relatively low.
  • As a result, the DC clearing price was, on average, low: £5.20/MW/h, so the month's DC revenue share was low.
  • Excluding 12th December, wholesale and DC revenue each made up around 30% of the battery revenue stack. Batteries capturing the >£1,500 price spread on the 12th of the month boosted wholesale revenues to 37%.
  • Signal anticipated more sustained price spreads, which fed into a higher DC clearing price forecast. So, the out-turn share of revenues between wholesale and DC was the reverse of our projection.

What does this mean for battery revenues?

  • Historically, Dynamic Containment revenues have been greater than wholesale, which is what Signal predicted.
  • However, it only took one day of mega-high wholesale revenues (with Dynamic Containment revenues dipping to all-time lows) to have a really significant overall effect on Benchmark revenues.
  • This is the first time we saw wholesale revenues overtake Dynamic Containment revenues, and it won’t be the last as Dynamic Containtment saturation continues to depress prices.

Pssst... You can read about our latest Signal methodology updates here (which now includes the Balancing Mechanism!). Check back next month to see how Signal’s projection compares to January revenues!

You can see our public roadmap for Signal here: what we’re currently working on, and what's in the pipeline. We’d love to hear your suggestions on what you’d like us to include next!

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