Version 3.2 of the Modo Energy Battery Revenue forecast for Great Britain has just been released. This update introduces advanced demand modeling for electric vehicles and heat pumps. Changes to Capacity Market de-rating factors and Balancing Mechanism dispatch rates have also been included, as well as the quarterly update to commodity prices.
We held a livestream on Tuesday 15th October to cover these changes in more detail. The slides are available for download here and we have answered your questions in the forecast documentation here.
Modelling changes
Power demand in Great Britain has been falling over time due to declining industry and increasing energy efficiency. However, we forecast that the electrification of transportation and domestic heating will change this, with demand rising 72% by 2035.
We’ve introduced new demand modeling to capture the impact this will have on the power price and the spreads available to BESS.
Optimized electric vehicles increase overnight prices and compete with BESS in the peak
We project that by 2035, 18 million electric vehicles will account for 15% of total overnight power demand. Our updated model accounts for commuting patterns, weather impacts, and relevant energy tariffs to give a granular view of EV charging demand.
Currently, most EV charging is unoptimized, meaning that power demand peaks when cars are plugged in to charge in the evening. By 2030, 40% of vehicles will be able to smart charge, utilizing cheap power to charge overnight. This extra demand will double the average overnight price.
Around 20% of vehicles will also feature vehicle-to-grid technology, allowing them to discharge into the grid during the evening peak and compete with grid-scale BESS. However, the remaining 20% of unoptimized vehicles offset most of the price impact here.
Heat pump demand driven by real-time weather conditions
By 2035, we project that 16% of households will be heated with heat pumps, up from less than 1% today. Heat pump demand will be responsible for 20% of total demand during winter peaks.
Real-time weather conditions drive heat pump demand in our updated model, meaning that the wind that chills homes and drives heat demand also spins the turbines that supply the power.
Other changes
- Ramp rates for batteries above 300MW: Batteries above 300 MW face ramp rate restrictions that limit their trading flexibility. We’ve updated our model to maximize revenue around these restrictions - which we’ve previously explored here.
- Updates to carbon capture and storage (CCS) subsidies: we’ve updated subsidy assumptions in the investment calculations for gas CCGTs with CCS.
Short-term outlook
Gas prices increase by 12% in 2025
Future expectations of gas prices have increased since the previous version due to growing geopolitical instability in the Middle East. These expectations form the basis of near-term gas prices in the model. Gas prices for 2024 and 2025 are 12% higher than in V3.1 and an average of 3% higher up to 2028.