Video

<p>Media and Communications are the frontline between business, the public and the government. Effective communication is instrumental in the energy transition, find out why in this week&#x27;s episode. </p><figure class="video strchf-type-video regular strchf-size-regular strchf-align-center"><div class="embed-container"><div style="max-width: 100%; position: relative; padding-top: 56.25%;"><iframe src="https://fast.wistia.net/embed/iframe/qwksy26jx1" title="Communicating net zero with Juliette Sanders (Director of Communications @ Energy UK) Video" allow="autoplay; fullscreen" allowtransparency="true" frameborder="0" scrolling="no" class="wistia_embed" name="wistia_embed" msallowfullscreen="" width="960" height="540" style="position: absolute; top: 0px; left: 0px; width: 100%; height: 100%; border: none;"></iframe></div></div><figcaption>Juliette Sanders talks communications </figcaption></figure><p>Quentin sits down with Juliette Sanders (aka. Killah Jules), Director Of Strategic Communications at Energy UK. Over the course of the conversation, they discuss:</p><ul><li>Juliette&#x27;s career and role at Energy UK, what they do and who they represent.</li><li>A brief look into the state of wind buildout and what happened at the latest <strong>IPCC a</strong>ssessment report (AR5) </li><li>The importance of effective and engaging communications when trying to bring people along on the net zero journey.</li><li>Why we still need to work on diversification and inclusion within the energy industry and how the TIDE taskforce is helping to tackle it.</li><li>And of course - how Killah Jules is engaging the public and spreading the word about renewable energy!</li></ul><h3 id="c546j">Listen on Spotify </h3><figure class="embed strchf-type-embed regular strchf-size-regular strchf-align-center"><div class="embed-container"><div style="max-width: 100%; position: relative; padding-top: 21.7143%;"><iframe style="border-radius: 12px; position: absolute; top: 0px; left: 0px; width: 100%; height: 100%; border: none;" width="700" height="152" title="Spotify Embed: Communicating net zero with Juliette Sanders (Director of Communications @ Energy UK)" frameborder="0" allowfullscreen="" allow="autoplay; clipboard-write; encrypted-media; fullscreen; picture-in-picture" loading="lazy" src="https://open.spotify.com/embed/episode/7wKQWUh2cron1wgvdPE7kV?si=a34a52bd64bd4bc7&amp;utm_source=oembed"></iframe></div></div><figcaption>Listen on Spotify</figcaption></figure><h3 id="dmq1k">Listen on Apple Podcasts</h3><figure class="embed strchf-type-embed regular strchf-size-regular strchf-align-center"><div class="embed-container"><div style="max-width: 100%; position: relative; padding-top: 26.5152%;"><iframe src="https://embed.podcasts.apple.com/gb/podcast/communicating-net-zero-with-juliette-sanders-director/id1613338951?i=1000628637248" height="175px" frameborder="0" sandbox="allow-forms allow-popups allow-same-origin allow-scripts allow-top-navigation-by-user-activation" allow="autoplay *; encrypted-media *;" style="width: 100%; max-width: 660px; overflow: hidden; border-radius: 10px; background: transparent; position: absolute; top: 0px; left: 0px; height: 100%; border: none;"></iframe></div></div><figcaption>Listen on Apple Podcasts</figcaption></figure><h3 id="5spc9">Mentioned in the episode</h3><ul><li><a href="http:// https://www.energy-uk.org.uk/insights/the-clean-growth-gap/ ">The Clean Growth Gap</a> reports.</li><li>Listen to Killah Jules on her<a href="https://www.youtube.com/channel/UC85Ld9YGG6EPoiz3j0q9hyQ"> youtube channel </a> or check out her <a href="http://www.killahjules.com">website </a>for tunes and wind turbine jewellery!</li></ul><h3 id="7jc7h">About our Guest</h3><p>Energy UK are the trade association for the UK energy industry with over 100 members including suppliers, generators, aggregators, flexibility providers, electric vehicle charging operators and software companies. They work with sector, government, regulators and wider stakeholders to champion a sustainable UK energy industry.<br/>For more information on what Energy UK do - head to their <a href="https://www.energy-uk.org.uk/">website.</a><br/>Follow Juliette on <a href="https://www.linkedin.com/in/juliettesanders/">LinkedIn </a>or on <a href="https://twitter.com/jhmsanders?lang=en">Twitter</a>. <br/></p><h4 id="7qtus"><strong>About Modo</strong></h4><p><a href="https://modoenergy.com/">Modo Energy </a>provides benchmarking, forecasts, data, and insights for new energy assets - all in one place, ensuring owners and operators of battery energy storage can make the most out of their assets. Modo’s paid plans serve more than 80% of battery storage owners and operators in Great Britain.</p><p>To keep up with all of our latest updates, research, analysis, videos, podcasts, data visualizations, live events, and more, follow us on <a href="https://www.linkedin.com/company/modo-energy/mycompany/verification/?viewAsMember=true">Linkedin.</a> If you want to peek behind the curtain for a glimpse of our day-to-day life in the Modo office(s), check us out on <a href="https://www.instagram.com/modo_energy/">Instagram.</a></p><script>if(window.strchfSettings === undefined) window.strchfSettings = {};window.strchfSettings.stats = {url: "https://modo.storychief.io/en/podcast-communicating-net-zero-juliette-sanders?id=1908664972&type=1",title: "Podcast: Communicating net zero with Juliette Sanders",siteId: "4263",id: "fbc2a837-ffbc-449e-b5ee-99c1b60b48cb"};(function(d, s, id) {var js, sjs = d.getElementsByTagName(s)[0];if (d.getElementById(id)) {window.strchf.update(); return;}js = d.createElement(s); js.id = id;js.src = "https://d37oebn0w9ir6a.cloudfront.net/scripts/v0/strchf.js";js.async = true;sjs.parentNode.insertBefore(js, sjs);}(document, 'script', 'storychief-jssdk'))</script>

Quentin is joined by Juliette Sanders ( Director of Strategic Commications at Energy UK) in this episode of Modo: The Podcast. Over the course of the conversation, they discuss how the energy insustry can bring everyone along on the journey to net zero.

Podcast: Communicating net zero with Juliette Sanders

Media and Communications are the frontline between business, the public and the government. Effective communication is instrumental in the energy transition, find out why in this week's episode. Juliette Sanders talks communications Quentin sits down w...

Policy

offshore wind

communications

Market updates

<p>Battery energy storage revenues across the GB fleet in August fell to the lowest level since September 2020. But what caused the fall?</p>

<figure class="video strchf-type-video regular strchf-size-regular strchf-align-center">
<div class="embed-container">
<div style="max-width: 100%; position: relative; padding-top: 56.25%;"><iframe allow="autoplay; fullscreen" allowtransparency="true" class="wistia_embed" frameborder="0" height="540" msallowfullscreen="" name="wistia_embed" scrolling="no" src="https://fast.wistia.net/embed/iframe/nlqbh7z7s9" style="position: absolute; top: 0px; left: 0px; width: 100%; height: 100%; border: none;" title="DD Shaniyaa 31-08-23 V3 Video" width="960"></iframe></div>
</div>

<figcaption>Shaniyaa explores what was behind the drop in battery revenues in August.</figcaption>
</figure>

<p><strong>The Modo Battery Revenue Benchmark for August was &pound;3.4k/MW - equivalent to an annualized &pound;40k/MW/yr. </strong></p>

<p>Any batteries that earned more than this amount (the median revenue of all the assets on the <a href="https://modoenergy.com/benchmarking/leaderboard">Modo Leaderboard</a>) did better than most across the month.</p>

<figure class="image strchf-type-image regular strchf-size-regular strchf-align-center"><picture><source media="(max-width: 768px)" srcset="https://images.storychief.com/account_26864/image_5cc5eec732524b67391eafa1f2cbdd8d_800.png 1x, https://images.storychief.com/account_26864/image_5cc5eec732524b67391eafa1f2cbdd8d_1600.png 2x" /><source media="(min-width: 769px)" srcset="https://images.storychief.com/account_26864/image_5cc5eec732524b67391eafa1f2cbdd8d_800.png 1x, https://images.storychief.com/account_26864/image_5cc5eec732524b67391eafa1f2cbdd8d_1600.png 2x" /><img src="https://images.storychief.com/account_26864/image_5cc5eec732524b67391eafa1f2cbdd8d_800.png" /></picture></figure>

<ul>
	<li>August&rsquo;s revenues were the lowest since September 2020 - the month before Dynamic Containment was launched as a service.</li>
	<li>This was a 43% fall from <a href="https://modoenergy.com/research/9846">fleet revenues in July</a> and the lowest seen this year.</li>
</ul>

<h2 id="79a63">Dynamic Containment prices fall to their lowest-ever point</h2>

<p>July had seen a resurgence in Dynamic Containment prices following an increase in Dynamic Containment Low procurement volumes. This was short-lived, however, with procurement volumes reducing back down in August to the levels seen earlier in the summer.</p>

<p>This meant that the effects of saturation continued, and prices for the largest frequency response service for battery energy storage are now at their lowest-ever levels.</p>

<figure class="image strchf-type-image regular strchf-size-regular strchf-align-center"><picture><source media="(max-width: 768px)" srcset="https://images.storychief.com/account_26864/image_eb2570c0f85836d33ca8d18409765be9_800.png 1x, https://images.storychief.com/account_26864/image_eb2570c0f85836d33ca8d18409765be9_1600.png 2x" /><source media="(min-width: 769px)" srcset="https://images.storychief.com/account_26864/image_eb2570c0f85836d33ca8d18409765be9_800.png 1x, https://images.storychief.com/account_26864/image_eb2570c0f85836d33ca8d18409765be9_1600.png 2x" /><img src="https://images.storychief.com/account_26864/image_eb2570c0f85836d33ca8d18409765be9_800.png" /></picture></figure>

<ul>
	<li>Dynamic Containment Low averaged<strong> &pound;1.49/MW/h </strong>in August, whilst Dynamic Containment High averaged<strong> &pound;2.90/MW/h.</strong></li>
	<li>The combined Dynamic Containment price of &pound;4.40/MW/h is 52% lower than in July, and a 17% drop from the previous low in May 2023.</li>
</ul>

<h3 id="9aleg">Other frequency response revenues faced the squeeze, too</h3>

<p>All four frequency response services saw prices fall in August - Dynamic Regulation with the biggest drop (<strong>&pound;8.23/MW/h</strong>, -44% from July) alongside Dynamic Containment. This means that National Grid ESO&rsquo;s spend on these services is now at its lowest point since November 2020 - just one month into the launch of Dynamic Containment Low.</p>

<p>With the battery energy storage fleet bigger than ever, revenues available from these services continue to face the squeeze.</p>

<figure class="image strchf-type-image regular strchf-size-regular strchf-align-center"><picture><source media="(max-width: 768px)" srcset="https://images.storychief.com/account_26864/image_469be8156884cae138006eacfc40b1bb_800.png 1x, https://images.storychief.com/account_26864/image_469be8156884cae138006eacfc40b1bb_1600.png 2x" /><source media="(min-width: 769px)" srcset="https://images.storychief.com/account_26864/image_469be8156884cae138006eacfc40b1bb_800.png 1x, https://images.storychief.com/account_26864/image_469be8156884cae138006eacfc40b1bb_1600.png 2x" /><img src="https://images.storychief.com/account_26864/image_469be8156884cae138006eacfc40b1bb_800.png" /></picture></figure>

<h2 id="8md6j">Battery energy storage revenues from energy arbitrage actions continued to increase</h2>

<p>Whilst revenues from frequency response services fell in August, revenues from other sources increased. Combined revenues from wholesale trading and the Balancing Mechanism rose to just under &pound;1k/MW - their highest levels since January 2023.</p>

<figure class="image strchf-type-image regular strchf-size-regular strchf-align-center"><picture><source media="(max-width: 768px)" srcset="https://images.storychief.com/account_26864/image_96210f06a048d448893118110ea5adf0_800.png 1x, https://images.storychief.com/account_26864/image_96210f06a048d448893118110ea5adf0_1600.png 2x" /><source media="(min-width: 769px)" srcset="https://images.storychief.com/account_26864/image_96210f06a048d448893118110ea5adf0_800.png 1x, https://images.storychief.com/account_26864/image_96210f06a048d448893118110ea5adf0_1600.png 2x" /><img src="https://images.storychief.com/account_26864/image_96210f06a048d448893118110ea5adf0_800.png" /></picture></figure>

<ul>
	<li><strong>Balancing Mechanism revenues are at their highest levels since December 2021</strong>. Dispatch volumes continue to increase, with a total of 27 GWh in August, up 80% from July!</li>
	<li>Trading revenues fell from July, with lower trading spreads available in the month.</li>
</ul>

<h3 id="5eri4">Trading spreads fell slightly, with no repeat of July&rsquo;s negative prices</h3>

<p>Two big <a href="https://modoenergy.com/research/9590">negative pricing</a> events dominated wholesale prices in July. This provided rare opportunities for battery energy storage to be paid to charge up in the wholesale market. There were no repeats of this in August, with a low of &pound;14/MWh in the hourly N2EX market on 19th August.</p>

<p>By contrast, two days saw prices rise in the evening following tight conditions. Prices peaked at &pound;194/MWh on 23rd August, and &pound;204/MWh the following day. <strong>These were the highest hourly day-ahead prices seen since February. </strong>This helped both price spreads exceed &pound;100/MWh on both days.</p>

<figure class="image strchf-type-image regular strchf-size-regular strchf-align-center"><picture><source media="(max-width: 768px)" srcset="https://images.storychief.com/account_26864/image_857da862265f115c0b27635d73cbacff_800.png 1x, https://images.storychief.com/account_26864/image_857da862265f115c0b27635d73cbacff_1600.png 2x" /><source media="(min-width: 769px)" srcset="https://images.storychief.com/account_26864/image_857da862265f115c0b27635d73cbacff_800.png 1x, https://images.storychief.com/account_26864/image_857da862265f115c0b27635d73cbacff_1600.png 2x" /><img src="https://images.storychief.com/account_26864/image_857da862265f115c0b27635d73cbacff_800.png" /></picture></figure>

<h2 id="aplvj">Energy markets will be key to any recovery of battery revenues heading into autumn</h2>

<p>August shows us that saturation of frequency response markets is here to stay.</p>

<p>Dynamic Containment&rsquo;s price jump in July has been more than reversed, and battery capacity competing for contracts is only going to increase. With no new ancillary markets until the arrival of new reserve markets in early 2024, there&rsquo;s little on the horizon to change the direction of travel for frequency response prices.</p>

<p>This means that battery owners and operators are likely to be left reliant on an increase in wholesale pricing volatility and balancing mechanism dispatches to see an uptick in revenues.</p>

<p>History has shown this is possible - September 2021 saw record wholesale volatility with low wind speeds and high levels of conventional plant outages. This led to some of the highest battery energy storage revenues we&rsquo;ve ever seen.</p>

<p>Meanwhile, the momentum behind Balancing Mechanism reform is continuing to grow. National Grid ESO is hosting an event on 3rd October based on a roadmap for reforms. Head <a href="https://subscribers.nationalgrid.co.uk/t/d-e-vtyuijt-iiiyutdhir-t/">here</a> to register!</p>
<script>if(window.strchfSettings === undefined) window.strchfSettings = {};window.strchfSettings.stats = {url: "https://modo.storychief.io/en/battery-energy-storage-august-2023-revenues-fall-benchmark?id=1465474117&type=1",title: "Battery energy storage: what caused a fall in August’s revenues?",siteId: "4263",id: "fbc2a837-ffbc-449e-b5ee-99c1b60b48cb"};(function(d, s, id) {var js, sjs = d.getElementsByTagName(s)[0];if (d.getElementById(id)) {window.strchf.update(); return;}js = d.createElement(s); js.id = id;js.src = "https://d37oebn0w9ir6a.cloudfront.net/scripts/v0/strchf.js";js.async = true;sjs.parentNode.insertBefore(js, sjs);}(document, 'script', 'storychief-jssdk'))</script>

What was the battery energy storage Revenue Benchmark for August 2023? What happened in Dynamic Containment? And are trading revenues on the up?

Battery energy storage: what caused a fall in August’s revenues?

Battery energy storage revenues across the GB fleet in August fell to the lowest level since September 2020. But what caused the fall? Shaniyaa explores what was behind the drop in battery revenues in August.

Benchmarking

Leaderboard

revenues

Frequency Response Services

GB BESS Index

Research

<p>Gas and carbon prices are the two main factors affecting power prices in Great Britain. Gas prices have more than halved from the levels reached in 2022, and carbon prices have fallen considerably, too. But how much has this contributed to <a href="https://modoenergy.com/research/10124">lower</a> battery energy storage revenues?</p>

<figure class="video strchf-type-video regular strchf-size-regular strchf-align-center">
<div class="embed-container">
<div style="max-width: 100%; position: relative; padding-top: 56.25%;"><iframe allow="autoplay; fullscreen" allowtransparency="true" class="wistia_embed" frameborder="0" height="540" msallowfullscreen="" name="wistia_embed" scrolling="no" src="https://fast.wistia.net/embed/iframe/nrhryf4fi2" style="position: absolute; top: 0px; left: 0px; width: 100%; height: 100%; border: none;" title="DD Wendel 14-09-23 V4 Video" width="960"></iframe></div>
</div>

<figcaption>Wendel discusses the relationship between gas prices and battery energy storage revenues</figcaption>
</figure>

<h2 id="e3dth">Gas and carbon prices play a big role in setting power prices - because of CCGTs</h2>

<p>Renewables are quickly growing in their share of the electricity generation mix in Great Britain. However, one-third of power is still provided by gas-fuelled plants, mostly Combined Cycle Gas Turbines (CCGTs).</p>

<p>Even on the windiest of days, some power from CCGTs is still needed - either through the wholesale market or the Balancing Mechanism. Because the <a href="https://modoenergy.com/research/channels/the-energy-academy?wchannelid=wy5tng1x36&amp;wmediaid=mw0tq69ycr">marginal-priced plant sets power prices</a>, CCGTs are responsible for setting prices much of the time - even when low-cost renewables are generating lots of power.</p>

<p><strong>Therefore, power prices in Great Britain are strongly linked to the underlying fuel costs for CCGTs - gas prices and carbon prices</strong>. Both had risen significantly across 2021 and 2022 but have fallen this year.</p>

<figure class="image strchf-type-image regular strchf-size-regular strchf-align-center"><picture><source media="(max-width: 768px)" srcset="https://images.storychief.com/account_26864/image_1de011bc15b78a443e740572b35bd05b_800.png 1x, https://images.storychief.com/account_26864/image_1de011bc15b78a443e740572b35bd05b_1600.png 2x" /><source media="(min-width: 769px)" srcset="https://images.storychief.com/account_26864/image_1de011bc15b78a443e740572b35bd05b_800.png 1x, https://images.storychief.com/account_26864/image_1de011bc15b78a443e740572b35bd05b_1600.png 2x" /><img alt="Gas and carbon prices in great britain" src="https://images.storychief.com/account_26864/image_1de011bc15b78a443e740572b35bd05b_800.png" /></picture></figure>

<h3 id="1e8uc">Gas prices dominate changes in power price in Great Britain</h3>

<p>The primary driver of CCGT costs is the price of gas. Because CCGTs are often responsible for setting power prices, a strong relationship exists between power prices and gas prices in Great Britain. This link sent power prices skyrocketing in 2022 and caused governments to <a href="https://modoenergy.com/research/6681">scramble</a> to provide support for electricity bills.</p>

<figure class="image strchf-type-image regular strchf-size-regular strchf-align-center"><picture><source media="(max-width: 768px)" srcset="https://images.storychief.com/account_26864/image_28c50d087d47847e638e95478b1a5a33_800.png 1x, https://images.storychief.com/account_26864/image_28c50d087d47847e638e95478b1a5a33_1600.png 2x" /><source media="(min-width: 769px)" srcset="https://images.storychief.com/account_26864/image_28c50d087d47847e638e95478b1a5a33_800.png 1x, https://images.storychief.com/account_26864/image_28c50d087d47847e638e95478b1a5a33_1600.png 2x" /><img alt="Gas prices power prices great britain" src="https://images.storychief.com/account_26864/image_28c50d087d47847e638e95478b1a5a33_800.png" /></picture></figure>

<h3 id="j3p9">Carbon prices play a part too</h3>

<p>Because CCGTs are responsible for setting prices a lot of the time, power prices are also linked to carbon prices, which gas and other carbon-emitting power plants pay.</p>

<p>The UK has two &lsquo;carbon prices&rsquo;. The first is set by an actively traded commodity within the <strong>Emissions Trading System (ETS)</strong>, currently trading for &pound;40/tonne CO<small>2</small>. The UK also has the <strong>Carbon Price Support (CPS)</strong>, set at &pound;18/t CO<small>2</small>. There are exemptions for smaller plants, but large carbon producing stations will pay for both of these.</p>

<p>The amount generators pay will depend upon the carbon intensity of their fuel - around 0.2t CO<small>2</small>/MWh for gas. Because of this intensity factor, carbon prices tend to have a weaker link to power prices than gas. Carbon prices currently account for around 30% of the cost of burning fuel for a CCGT.</p>

<figure class="image strchf-type-image regular strchf-size-regular strchf-align-center"><picture><source media="(max-width: 768px)" srcset="https://images.storychief.com/account_26864/image_ff85d289c17a51778d420d6a3364eaab_800.png 1x, https://images.storychief.com/account_26864/image_ff85d289c17a51778d420d6a3364eaab_1600.png 2x" /><source media="(min-width: 769px)" srcset="https://images.storychief.com/account_26864/image_ff85d289c17a51778d420d6a3364eaab_800.png 1x, https://images.storychief.com/account_26864/image_ff85d289c17a51778d420d6a3364eaab_1600.png 2x" /><img src="https://images.storychief.com/account_26864/image_ff85d289c17a51778d420d6a3364eaab_800.png" /></picture></figure>

<h2 id="d1oaq">Batteries depend on trading spreads - and these are linked to gas and carbon prices</h2>

<p>The link between gas and carbon prices and average power prices is clear. However, the baseload power price does not matter for battery energy storage. Batteries earn money by trading the daily spread in these prices, or within the Balancing Mechanism, or by contracting to deliver frequency response services.</p>

<p>But spreads in day-ahead prices do have a link to gas and carbon prices. Although CCGTs are responsible for setting prices most of the time, the efficiency of these varies across the fleet. Different efficiencies mean operators need to sell power at slightly different prices to make a profit, which creates spreads even when CCGTs set the wholesale price for the entire day.</p>

<figure class="image strchf-type-image regular strchf-size-regular strchf-align-center"><picture><source media="(max-width: 768px)" srcset="https://images.storychief.com/account_26864/image_81ccb94296960290734dc2cc9c360a01_800.png 1x, https://images.storychief.com/account_26864/image_81ccb94296960290734dc2cc9c360a01_1600.png 2x" /><source media="(min-width: 769px)" srcset="https://images.storychief.com/account_26864/image_81ccb94296960290734dc2cc9c360a01_800.png 1x, https://images.storychief.com/account_26864/image_81ccb94296960290734dc2cc9c360a01_1600.png 2x" /><img src="https://images.storychief.com/account_26864/image_81ccb94296960290734dc2cc9c360a01_800.png" /></picture></figure>

<p><strong>Essentially, the combination of gas and carbon prices forms a &lsquo;floor&rsquo; for spreads in the day-ahead power market in proportion to these two commodity prices.</strong></p>

<p>More extreme system conditions, whether high demand or an over-supply of renewable power, tend to increase spreads from this point.</p>

<p>Historically, a doubling in gas prices has led to around a doubling in day-ahead price spreads. The link to carbon prices is weaker - a change in carbon price leads to a change in spreads of around one-fifth.</p>

<p>So, if trading spreads for batteries are linked to gas and carbon prices, has this resulted in changes to revenues for battery energy storage?</p>

<h2 id="qjo4">Frequency response has negated the link between battery revenues and commodity prices</h2>

<p>Historically, there has not been that much of a connection between battery energy storage revenues and the underlying commodity prices. This is expected - because revenues have been dominated by frequency response. Prices for Dynamic Containment and other services have historically been set by supply and demand dynamics, not by links to wholesale prices.</p>

<figure class="image strchf-type-image regular strchf-size-regular strchf-align-center"><picture><source media="(max-width: 768px)" srcset="https://images.storychief.com/account_26864/image_f674163a6291031e60b5561d24eb1ce0_800.png 1x, https://images.storychief.com/account_26864/image_f674163a6291031e60b5561d24eb1ce0_1600.png 2x" /><source media="(min-width: 769px)" srcset="https://images.storychief.com/account_26864/image_f674163a6291031e60b5561d24eb1ce0_800.png 1x, https://images.storychief.com/account_26864/image_f674163a6291031e60b5561d24eb1ce0_1600.png 2x" /><img src="https://images.storychief.com/account_26864/image_f674163a6291031e60b5561d24eb1ce0_800.png" /></picture></figure>

<h4 id="8n8mi">This link is changing with a shift away from frequency response</h4>

<p>However, fleet revenues are transitioning away from being dependent upon frequency response. More battery revenues than ever now come from &lsquo;energy arbitrage&rsquo; actions - either trading in the wholesale market or being dispatched in the Balancing Mechanism.</p>

<figure class="image strchf-type-image regular strchf-size-regular strchf-align-center"><picture><source media="(max-width: 768px)" srcset="https://images.storychief.com/account_26864/image_4c3a94c780b565cabfffd0e41c25e192_800.png 1x, https://images.storychief.com/account_26864/image_4c3a94c780b565cabfffd0e41c25e192_1600.png 2x" /><source media="(min-width: 769px)" srcset="https://images.storychief.com/account_26864/image_4c3a94c780b565cabfffd0e41c25e192_800.png 1x, https://images.storychief.com/account_26864/image_4c3a94c780b565cabfffd0e41c25e192_1600.png 2x" /><img src="https://images.storychief.com/account_26864/image_4c3a94c780b565cabfffd0e41c25e192_800.png" /></picture></figure>

<p>Trading revenues are very highly connected to spreads in the day-ahead market. Likewise, there is a link within the Balancing Mechanism (BM). CCGTs provide the majority of balancing volume, at prices linked to gas and carbon prices. As batteries compete for dispatches, this creates a link there, too.</p>

<figure class="image strchf-type-image regular strchf-size-regular strchf-align-center"><picture><source media="(max-width: 768px)" srcset="https://images.storychief.com/account_26864/image_e632621d22e4607e6a18f64054496aaa_800.png 1x, https://images.storychief.com/account_26864/image_e632621d22e4607e6a18f64054496aaa_1600.png 2x" /><source media="(min-width: 769px)" srcset="https://images.storychief.com/account_26864/image_e632621d22e4607e6a18f64054496aaa_800.png 1x, https://images.storychief.com/account_26864/image_e632621d22e4607e6a18f64054496aaa_1600.png 2x" /><img src="https://images.storychief.com/account_26864/image_e632621d22e4607e6a18f64054496aaa_800.png" /></picture></figure>

<p><strong>This means revenues for battery storage now have a much stronger connection to these traded commodities than ever before.</strong></p>

<h2 id="3t155"><strong>Falls in gas and carbon prices have contributed to lower revenues in 2023</strong></h2>

<p>The saturation of frequency response markets has caused a collapse in prices from the highs of 2022. Therefore, many battery operators would have been hoping for volatility in the wholesale market to negate this. However, that hasn&rsquo;t been the case - day-ahead spreads in 2023 have fallen 58% from 2022, averaging &pound;66/MWh.</p>

<p><strong>Falling gas and carbon prices have been a contributor to this fall. Lower prices for both have accounted for a reduction in spreads in 2023 of at least 25%.</strong></p>

<p>The remaining 33% can be attributed to generally lower volatility in the electricity system. This year, the premium to day-ahead spreads based on volatility has been the lowest since before 2018.</p>

<figure class="image strchf-type-image regular strchf-size-regular strchf-align-center"><picture><source media="(max-width: 768px)" srcset="https://images.storychief.com/account_26864/image_5406d66b56572cc76d608ed13ec2280f_800.png 1x, https://images.storychief.com/account_26864/image_5406d66b56572cc76d608ed13ec2280f_1600.png 2x" /><source media="(min-width: 769px)" srcset="https://images.storychief.com/account_26864/image_5406d66b56572cc76d608ed13ec2280f_800.png 1x, https://images.storychief.com/account_26864/image_5406d66b56572cc76d608ed13ec2280f_1600.png 2x" /><img src="https://images.storychief.com/account_26864/image_5406d66b56572cc76d608ed13ec2280f_800.png" /></picture></figure>

<p>This illustrates just how poor year 2023 has been for wholesale price volatility. Day-ahead prices, and therefore price spreads, have consistently traded within the minimum range expected based on gas and carbon prices. Only a few days have broken away from this, mostly down to high renewable generation on the grid.</p>

<figure class="image strchf-type-image regular strchf-size-regular strchf-align-center"><picture><source media="(max-width: 768px)" srcset="https://images.storychief.com/account_26864/image_cdaa3a01d85eb1792aa1d3b655abf323_800.png 1x, https://images.storychief.com/account_26864/image_cdaa3a01d85eb1792aa1d3b655abf323_1600.png 2x" /><source media="(min-width: 769px)" srcset="https://images.storychief.com/account_26864/image_cdaa3a01d85eb1792aa1d3b655abf323_800.png 1x, https://images.storychief.com/account_26864/image_cdaa3a01d85eb1792aa1d3b655abf323_1600.png 2x" /><img src="https://images.storychief.com/account_26864/image_cdaa3a01d85eb1792aa1d3b655abf323_800.png" /></picture></figure>

<h3 id="32roe">There is still time for things to change in 2023</h3>

<p>As we head into autumn, gas prices appear to have reached a floor based on global prices of Liquified Natural Gas (LNG). The fall in UK carbon prices has also slowed down too. This makes it unlikely that we will see further falls in trading spreads due to these two commodities this year.</p>

<p>As the heating season starts in Europe, imports of LNG will be needed to maintain storage levels, and gas prices are expected to increase. Recent gas forward curves indicate an increase in gas prices of around 30% through winter. If it turns out to be colder than expected, gas demand and therefore prices could increase significantly - with trading spreads for battery storage increasing too.</p>

<p>It&#39;s not just conditions in Europe that matter - there is competition for LNG from buyers in Asia and elsewhere. <strong>Because of the link between gas prices and trading spreads, battery storage revenues are now more exposed to the global gas markets than ever.</strong></p>

<p>Finally, whilst day-ahead price volatility has been particularly low in 2023, the past two years show how quickly this can change as we head into winter. Any price spikes such as that seen in <a href="https://modoenergy.com/research/7296">December 2022</a> can quickly turn the fortunes of the battery fleet.</p>
<script>if(window.strchfSettings === undefined) window.strchfSettings = {};window.strchfSettings.stats = {url: "https://modo.storychief.io/en/battery-energy-storage-gas-carbon-prices?id=1344994231&type=1",title: "Battery energy storage: how do gas and carbon prices affect revenues?",siteId: "4263",id: "fbc2a837-ffbc-449e-b5ee-99c1b60b48cb"};(function(d, s, id) {var js, sjs = d.getElementsByTagName(s)[0];if (d.getElementById(id)) {window.strchf.update(); return;}js = d.createElement(s); js.id = id;js.src = "https://d37oebn0w9ir6a.cloudfront.net/scripts/v0/strchf.js";js.async = true;sjs.parentNode.insertBefore(js, sjs);}(document, 'script', 'storychief-jssdk'))</script>

Gas and carbon prices in Great Britain have both fallen in 2023. This article looks at the impact this has had on battery energy storage revenues.

Battery energy storage: how do gas and carbon prices affect revenues?

Gas and carbon prices are the two main factors affecting power prices in Great Britain. Gas prices have more than halved from the levels reached in 2022, and carbon prices have fallen considerably, too. But how much has this contributed to lower battery energy storage revenues?

Battery Storage

Gas Prices

Carbon

forecast

In April 2023, a report published by the House of Commons stated that, at the UK’s current pace of change, it will miss its target of decarbonising the power sector by 2035. As the UK fights to secure its energy supply, what progress is being made in the renewable sector, and what needs to change? 

Are we on track to meet solar power targets?

Electriq Power CEO Frank Magnotti on how energy storage could help unlock the potential of community solar and enable more people to benefit.

Energy storage can make community solar more financially resilient in wake of bank failures

Equipmake has partnered with the world’s largest sightseeing company, Big Bus Tours, in a fleet deal that will see 10 double-deck, open-top buses in London repowered with its electric zero emission electric drivetrain technology. The vehicles scheduled for repowering are all Ankai double-deck sightseeing buses, and each will be converted to incorporate Equipmake’s Zero-Emission Drivetrain 

Big Bus Tours signs electric bus repower fleet deal with Equipmake

Oleg Korolov from New AutoMotive addresses the government's recently announced decarbonisation delays.

New AutoMotive: Why we’re refusing to throw in the towel and get the UK back on track to 2030

Public consultation has opened on a large-scale solar PV project in Buckinghamshire which is at the early stages of development, by co-owners EDF Renewables UK and PS Renewables.

Consultation for EDF’s second NSIP utility-scale PV project, with 500MW grid connection secured

StoreDot, the extreme fast charging (XFC) battery technology specialist for EVs, has signed multi-year agreement to develop an optimised battery for next generation Volvo cars. The two companies say the collaboration will lead to the development of XFC cells which will be optimized and tailored for Volvo’s future electric vehicle architectures. It is expected that 

StoreDot and Volvo to develop cells for next generation EVs

How deep is the market for battery storage in the Balancing Mechanism (BM)? And with battery capacity set to grow significantly, is there a risk of saturation even in the BM?

https://modoenergy-prod.s3.amazonaws.com/media/phase_hero/2023/09/26/Frame_2608551-2.png

released in 9.17.1 This feature flag allows you to switch to a new encoding function for assets name.

pantipova@s-pro.io

assets_explorer_encoding_name

default

released in 9.17.1 This feature flag allows you to switch to use endpoints, where bmu_id is an indicator instead asset name.

pantipova@s-pro.io

assets_explorer_endpoints_v2

released in 9.19 This feature flag allows you to fix Axios X for the Revenue graph.

pantipova@s-pro.io

assets_fixed_axiosx_chart

released in 9.17.1 This feature flag allows you to switch to Asset Explorer Main page v2.

ME-7624, ME-7628

pantipova@s-pro.io

assets_main_page_v2

bm_overview

released in 9.18 This feature flag allows you to switch charts' labels to settlement periods on 1D view.

pantipova@s-pro.io

bm_settlement_periods_charts

released in 9.17.1 This feature flag allows you to switch to Asset Explorer v2.
pantipova@s-pro.io

bm_v2

Released in 9.18
This feature flag allows you to change website appearance. For example press combination `Alt + d`

rnaumenko@s-pro.io

dark_mode

data_downloads

Will be released in 9.20
This feature flag enables the appearance of the RSS feed in the footer menu

author: Roman Tsekov rtsekov@s-pro.io

footer_rss_feed

Will be released in 9.20
This feature flag allows you to switch to Forecast page.

ME-7719
release 9.20

This feature flag turning on/off Heap Analytics


rnaumenko@s-pro.io

heap_analytics

This FF makes possible to disable Feature Flags from Launchdarkly

launchdarkly_disabled

released in 9.17.1 This feature flag allows you to add the initial loading mock data to the Leaderboard graph.

pantipova@s-pro.io

leaderboard_initial_loading

released in 9.17.1 This feature flag allows you to add an id to asset redirects.

pantipova@s-pro.io

leaderboard_uid_assets

Released in 9.18
This feature flag show/hide Legal Pages

rnaumenko@s-pro.io

legal_pages

Already released
This feature flag enables/disables the functionality that allows us to show the markets tabs in a full mode.

mshamanskyi@s-pro.io

markets_presets_full_screen

Will be released in 9.20
This feature flag enables/disables the display of the Billing page for the users with the "admin" and the "user" roles.

Author: Vitaii Derda, vderda@s-pro.io

new_billing

Released in 9.18
This feature flag enables/disables the display of the new Join Existing Company page.

Author: Vitaii Derda, vderda@s-pro.io

new_join_company

Released in 9.18
This feature flag enables/disables the display of the new Pricing page.

Author: Vitaii Derda, vderda@s-pro.io

new_pricing

plotter is already released in prod, but it's still wrapped by feature flag in prod environment, so we still need to keep it while unwrapping in code on prod environment

plotter_iteration_1

Will be released in 9.20
This feature flag enables the appearance of the password-validation block in Sign-Up/Restore Password page

author: Roman Tsekov rtsekov@s-pro.io

sign_up_password_validation

Released in 9.18
This feature flag enables the appearance of the "Play Tutorial" button on the Benchmarking and Markets pages. 

author: Valentyn Domanskyi vdomanskyi@s-pro.io

tutorials

Released in 9.20
This feature flag enables/disables the display of the new Twitter icon (on - x, off - bird).

Author: Vitaii Derda, vderda@s-pro.io

How deep is the market for battery storage in the Balancing Mechanism (BM)? And with battery capacity set to grow significantly, is there a risk of saturation even in the BM?

Battery energy storage: how do gas and carbon prices affect revenues?

Podcast: Communicating net zero with Juliette Sanders

Battery energy storage: what caused a fall in August’s revenues?

Industry news

Are we on track to meet solar power targets?

Energy storage can make community solar more financially resilient in wake of bank failures

Big Bus Tours signs electric bus repower fleet deal with Equipmake

New AutoMotive: Why we’re refusing to throw in the towel and get the UK back on track to 2030

Consultation for EDF’s second NSIP utility-scale PV project, with 500MW grid connection secured

StoreDot and Volvo to develop cells for next generation EVs

Stay on top

Resources

Legal

Support