Market update: Great Britain with Wendel Hortop (Market Lead @ Modo Energy)

Right number is there's no rule. The right number is that the control room sees how much energy each battery has, and some sort of algorithmic dispatch can then work out how long it could dispatch it for.

So no rule is what we're aiming for. No rule.

Yeah. Like, the fact is there have been a lot of these rules and things which actually, on the surface, don't even realize are there, that have been probably blocking how certain technologies can be used in the balance mechanism.

Hello, and welcome back to Transmission.

Today, Quentin is in the studio with MODO Energy's GB Market lead, Wendell Hortop. The Conversation takes a deep dive into the workings of the GB Market over the last couple of months. As always, if you are enjoying the podcast, please hit subscribe so you never miss an episode.

And with that, let's jump in.

Hello, Wendell. Hi, Q, and hello, listeners.

This week, we've got something a bit different. We're gonna talk about what on earth's been going on in battery storage, and we've had a rough few months in revenue terms, to say the least.

Would you agree? Definitely.

And so we're gonna have a go at explaining what's what's happened. We're gonna ask some difficult questions. Well, I'm gonna ask you a lot of difficult questions, Wendell. Alright.

I guess we should start the index. Alright. So we're gonna talk let's talk about pounds per megawatt or actually, let's let's set some parameters or some guardrails for this conversation about how we're gonna talk about numbers and batteries and and all that. What is the index, and how are we gonna do this conversation?

Yeah. So the index is essentially what Moto tracks. It's the average revenue batteries earn, in different markets. So we kinda track that by sort of half hour, but usually you look at it on a monthly basis. And we put those numbers in a pound per megawatt per year basis, so you can compare month to month, year to year just with one single figure.

Okay. So when we talk about yes. When we talk about numbers, we're gonna be grossing up to yearly and annual. All of that's a little bit naughty sometimes because you can you lose some fidelity in the numbers, but the industry thinks about things in pounds per megawatt per year, and so we're gonna stick to that parlance.

Yeah. So I guess, yeah, what's been going on with the index? Well, this winter, so November to February, that has averaged twenty seven thousand pounds per megawatt per year, and that's across frequency response, wholesale trading, and also revenues in the balancing mechanism. Does that include capacity market? That doesn't include the capacity market. On average, the capacity market is worth an extra thirteen thousand pounds per year.

Okay.

But that is, like, pretty dependent on what contracts you were lucky or unlucky enough to get.

Okay. So the last six months or so, if you got a capacity market contract, you're looking at around forty thousand pounds a megawatt per year. But there's some big variance in there between the best performing assets and the worst performing assets. Right? So it's not this is on average. But is that number good or bad?

I mean, it's all relative, but I think we can say it's bad. Mhmm. So if you compare it to kind of historical numbers, so for all the twenty twenty three batteries earned on average fifty seven thousand pounds per year, so excluding capacity market. But back in twenty twenty two, that number was a hundred and fifty three thousand. And the last time we saw anything this low would be back in, like, twenty twenty, twenty nineteen.

And the the the background to this is there's been a ton of batteries built. I mean, the how many gigawatts do we have right now?

What Three point eight, three point nine gigawatts Okay.

Now operational.

Okay. For us for an electricity system that has peak demand of less than forty gigawatts now. We should talk about peak demand later, but less than forty gigawatts, and we've got about four ish online right now of batteries for one and two hour systems. And then we're gonna put another few gigawatts of batteries on the system in the next eighteen months. What's that look like?

We would expect to see at least another two gigawatts online this year, but, like, that could be three gigawatts if everything comes online kind of based on timelines they expect.

But then every year beyond that, it just goes up and up and up. If you look at sort of, you know, who's got capacity market contracts, what's been announced in the press, You know, by twenty twenty seven, we could see over ten gigawatts Mhmm.

Operational.

And folks building battery assets in general I wanna really oversimplify here. But in general, the business case is or was some frequency response for the first couple of years and then saturation hits. And then, essentially, you're building based on a a a belief or a business case that depends on volatility, price volatility in power markets and wholesale markets. But you're you're you're making a bet, essentially, that there's gonna be lots of renewables coming on the system, lots of intermittency, lots of old thermal plant retiring, all of these big macro things, which we'll talk about in a minute, but most of them are still true.

Right? Yeah. But what has happened is we've crossed the bit between mostly frequency response and mostly, mostly frequency response to mostly other things. Right?

So what's going on with frequency response?

So frequency response, essentially, it's no no longer the primary revenue driver for batteries in Great Britain. So I think anytime, even before November, the majority of revenues batteries earn on average was from the frequency response markets, and that's even since we said saturation had happened sort of at the back end of twenty twenty two. So if you kind of look at well, if you look at kind of our index, if you look at kind of the proportion of revenues from frequency response, it's basically ninety percent plus of revenues as far back as time goes for batteries. As of November onwards, it's down to maybe ten percent even as though it's, like, five percent, at some points this winter.

So there are periods where, just to get this right, for our index, which is the average earnings for batteries, there are periods where frequency response is only ten percent of of the total revenue stock for batteries.

Yeah. That is such a big change.

Yeah. And I think there's been kind of two two things. I mean, we we've we've talked about saturation a lot. It's been well, like, kind of forecast, and it's it we we knew it was coming. But no one really, I guess, knew what the end would look like. And I think we we now know what the end looks like, which is that batteries would essentially take frequency response contracts for for almost nothing.

Well, just a comment here. I mean, I've gotta come clean. I didn't expect some of these frequency response process to go as low as they have. I actually thought even with saturation so, yeah, we'll just talk about saturation for a second, which is there's now more megawatts of batteries than there are megawatts of contracts in these markets. So you now have a proper supply and demand curve, and, the market is now pricing in what the market really believes these these services are worth. There's been some peculiar things that have happened with the fixed fixed response market with negative pricing and the way people register and getting paid for stuff and willing to take, like, such low price on some products.

I gotta say, I didn't expect it going this low in frequency response markets.

No. Like, I think, like, if you just looked at the fundamentals of it, which is that in a saturated market, you would expect and so, essentially, people operating batteries to bid in at roughly what they think they could earn in other markets. And the number they generally got to is maybe, like, okay, five pounds per megawatt per hour, maybe even drop it to, like, four. But what we've seen this winter is, like, sort of systems taking contracts for, like, say, one pound.

You're doing a lot of work for that one pound per megawatt power.

Yeah. It's like this is the thing. Right?

Yeah. You're still delivering exactly the same service. Like, you're still you still got exactly the same kind of requirements to do do the metering, respond within sort of, yeah, like under half a second. So everything's still exactly the same. It's just you're getting paid a fraction of what you once were.

And the reason for this is there just hasn't been the volatility in the wholesale market. It's it's all about opportunity cost. Right? If you're doing frequency response instead of something else or alongside something else. And, yeah, this winter, there just wasn't anything like the volatility we expected. Can Can you just talk about that for a second, Wendell?

So the easiest way to to look at it is to look at the the spread that you'd earn in a given day if you were to just buy at the lowest price in the day head market and sell at the highest price. Doesn't kind of, like, perfectly represent what batteries earn, but it's a pretty good epoxy for it. So this winter, that spread has been, I think, between kind of sixty and seventy pounds per megawatt hour on average.

Well, can we just talk before we talk about this winter, generally in winters, you expect the spread to increase because you expect high it's more it's higher prices, not lower prices. So you expect at times where there's massive demand on the system and it's cold and all of that, you expect spreads to come from really, really peaky prices at times. And that's why you have peaking plan. That's why you have, you know, lots of odd things tend to happen around winter and you have tryouts and all this stuff. But just to make this clear, this is about the the spreads come in winter from the high prices, not necessarily the low prices.

Yeah. Precisely. In general, prices on average are higher. So prices on average this winter were higher than sort of they will be as we go into, like, kind of spring and summer.

But the spreads between the low and the high, was just pretty, like, historically low. So if we compare to twenty, sort of previous three winters, it's about a kind of a third, I think, on average in terms of just that volatility you're getting in the market. And so you're just earning a lot less from the wholesale market, and that is just because we haven't had those high peak prices. So I think the highest price we saw winter was two hundred and fifty pounds per megawatt hour.

Just so December twenty twenty two, the highest number was two thousand five hundred pounds And, you know, if you just had one of those periods this winter, you'd probably be thinking, okay. That's quite a good sign, but, you know, it it it shows that maybe the last few winters we have had that volatility.

It kind of raises questions of what has changed.

So the the lack of high prices this winter, even for small and short periods, which is where everybody really owns their crust in the winter and and all of that, it affects batteries. But we're gonna talk about the rest of the system as well because the lack of high prices has a big impact on other units. I mean, if you're if you're a gas generator, say say you're a CCGT or you're a peaking plant, it's been it's been a tough period as well.

Yeah. So, I mean, so, yeah, the very reason we haven't had those high prices because, essentially, the times when peaking plant have actually been running and therefore, like, setting the price in the wholesale market has been just a fraction of the time. You know? Or those plants would have been doing very, very well back in, like, twenty twenty two when we saw kind of, like, massive gas price volatility and wholesale price volatility.

But this winter, if you're a gas peaker, you you may be running only kind of, like, at at one percent of the time, maybe, like, five percent of the time. And, yeah, I think it it it's not just batteries that is being that are being affected by this kind of wholesale market conditions. If you're a gen if you're a sort of traditional generator, it's definitely gonna be hitting as well.

Yeah. I mean, if you if you're if you're a if you've got peaking plant and you're expecting to get a couple of thousand run hours a year and you're getting ten percent of that. That's tricky as well. I guess the point I'm making is, is anybody really making money in this market?

And actually, I think there are some. Right? So if you're if you're if you have access to subsidies well, let's just talk about that for a second. Is wind making money in this market?

Yeah. I mean, if you're if you're a wind farm and you have your CFD, you have your have your kind of o renewable obligation subsidy, You're you're sort of making what you were a year ago. I mean, there's not nothing's really changed for you because you've got that essentially fix.

It's being topped up by the subsidy.

Yeah. Similarly, if some big generators were smart enough to sort of forwards sell their power maybe a year ago when the forward curves of of electricity was so much higher. They're probably also have done quite well this winter. But anyone who sort of, I guess, yeah, had not been subsidized, who hasn't sort of contracted forward revenues, I think, would have been hit pretty hard.

That's because if you if you hedged last summer, I guess, the the curves if you look to the curves, everybody expected to be it'd be more peaky than it was, and then the reality was a bit different.

Yeah. I mean, I think on that, I I mean, a big part of what's happened is essentially recovery from sort of, like, the gas price crisis we had has probably been so much quicker than what anyone thought would happen. You know, we paid for that kind of, I think, in twenty twenty two, but we're seeing now gas prices fall considerably and carbon prices too. So carbon prices are now kind of at the lowest level for, I think, about four years. Yeah.

I mean, looking at gas inventories, so how much they how much gas there is in storage going into winter last year was phenomenal. And considering it's only sort of a couple of years ago that we were relying the whole of Europe was relying on on on Russian gas, and we've just in eighteen months or so switched from Russian gas to being part of the great American shale gas miracle is just it's absolutely bananas that so quickly we switch from, you know, pipeline gas to LNG, and the whole of Europe is okay with that. And we've just it's all ended up being you know, from a from a consumer point of view and being worried about, you know, governments having to subsidize gas, you know, residential gas and businesses and all that.

It's all just sort of worked out alright. A couple of years ago, there were got you know, European governments were really worried about having ten thousand pound so ten thousand pound bills for, for normal people, and that hasn't happened. So there's some good side of it, which is that, really, we managed to get out of jail free, really, switching to LNG as a society. What that has meant, though, is that for a system where a lot of the base load power is set by by gas and carbon, base load power prices have been really low.

Yeah. And I mean, I think consumers have seen that, like, I think so, yeah, as of the first of April, sort of, like, yeah, the consumer price cap has come down, like, considerably. So we are now seeing that, like, filter through the market entirely.

And I think the interesting thing, even though gas prices have fallen, carbon prices have fallen, if we look back, say, three years ago before that kind of the Russian invasion of Ukraine, gas prices were lower, carbon prices were lower, but we still had more wholesale price volatility.

And I think that goes to that well, you mentioned it earlier, sort of what is peak demand?

Have we got too much generation on the system right now?

So, yeah, this is one of the things another thing to to come clean about I didn't expect. And if you'd spoke to me two or three years ago, I never would have expected that peak demand, the triad period would have been less than forty gigs, really. I thought it was gonna, keep on increasing.

And what what has happened is we've lost three or four gigawatts of peak demand in the last couple of years.

And where's it where's it gone? I mean, is it is it is it deindustrialization?

Is it is it factories switching off from COVID and not coming back? Is it energy efficiency?

I don't know. But what it means is those those periods where the system is tight, I. E. Demand is high and there's not that much generation and you expect those peaky prices, it's just falling away.

Yeah. Yeah. So to put some numbers on that, so the average peak demand this winter was thirty seven gigawatts. It's the same as last winter, but that was like a kind of almost a ten percent fall from from just a few years back. And, you know, a big part of that has to be response to the kind of the, like, yeah, the record high electricity prices we had back in twenty twenty two.

And so, yeah, I guess, fundamentally, like, is that demand coming back? But another big part of it is actually yeah. So improved, energy efficiency and just more and more renewables on the system, which is essentially kind of behind the meet well, behind the transmission meter. So, yeah, you've got kind of more onshore wind, you've got more solar, and you've got more kind of demands, like people flexing their demand as well. Like, we've seen this winter, the demand flexibility scheme, I think get up to five hundred megawatts of response at times as well.

But still we should do the work on this. Thirty seven gigawatts of peak demand. So if we compare that to to ERCOT for example, in Texas, ERCOT's around the eighty something gigawatts, I can't remember the exact numbers, but adding, I think, four gigawatts year on year peak demand. And, yes, it's I guess it's hot, and, yes, that comes in summer period, but they're just adding a lot of industry in Texas.

Texas is, yeah, just adding lots of demand. So lots of manufacturing, lots of demand. It's just growth growth. It's a growth story.

I wonder whether but I I really wanna know how much of this thirty seven gigawatts from forty, how much of that difference comes from good stuff, like saving energy and behind the meter generation, or whether it really is, you know, is it a canary in a coal mine for a an economy that actually is going the wrong way with industry and and manufacturing.

I I actually wonder whether peak demand or yeah. Peak power demand in a world that's fine. Peak demand is a pretty is a pretty good proxy for GDP growth. But, yeah, we should do the work on that, see whether that's coming from good stuff or or bad stuff. But I just never imagined thirty seven gigawatts would be the peak in twenty twenty three, twenty twenty four.

So I mean, if you if you measure that up against what we've got in this country for generation, we've got sort of twenty seven gigawatts of combined cycle gas turbine generation.

How like, five gigawatts of new capacity, it changes. But then we've also got nine gigawatts of interconnected capacities now. So we had the kind of one point four gigawatt Viking link with Denmark come online, this winter.

And Oh, yeah. We've got to talk about interconnectors.

Well, yeah. So, I mean, of that nine point two gigawatts, we've got sort of one gigawatt of interconnection for Ireland. And, generally, Ireland is similar to us but actually higher price. So most of the time, we are exporting to Ireland.

But every other sort of market that we're interconnected with has a generally lower price than the UK, especially so France, which has had kind of all this nuclear capacity come back online this winter. So that's kind of anytime we've remotely had a high price here. We're just importing, I mean, like, four gigawatts from France. We've got Norway with all of it.

So hydro yeah. Denmark's all of it's by itself. Yeah. To yeah. Essentially, interconnectors currently are definitely suppressing peak prices here in the UK.

It we we gotta come back to the index though because there are a couple of assets that are it's not all doom and gloom. There's some assets that are actually doing pretty well. Whilst the average is low, there are some, particularly, two r assets, which are doing well. Pilsud, for example, a couple of others that have done well in the last couple of months.

And then with the capacity market contract, the best performing assets can see revenues around the sort of sixty five to seventy thousand pounds mark, which with higher interest rates and cost of capital, that's in the money, but it's it's it's it's just about on the cusp of it. So the point here is whilst we have had a few rough months, there are some assets that are still doing just about alright. And you don't build a fifteen year asset for and and and then start worrying about the month month on month. You just can't.

There'll be there'll be highs and lows. And my word, what a incredible run we had for two and a half, three years coming up to this. But, yeah, even in the tough times, there are some assets that still do pretty well.

So, essentially, yeah, if you're located in the southeast of, England, you're still getting a pretty good tried rate. And then, yeah, if you were built, say, yeah, twenty twenty eighteen, twenty nineteen, you've got a sort of pretty good old capacity market contract with no derating. But then also if you're kind of if you've got one of those newer capacity market contracts that, you know, a t one, which was seventy five pounds per kilowatt or the t four, which, well, we've got the t four coming up, which is, like, clear about sixty pounds. But you do get screwed on the d rating. Yeah. But you are getting screwed on the d rating now.

But in general Screwed's a bit strong, but I do definitely think it's the right word.

There's a there's a big disparity in the market based on what capacity market contract you've got. And because revenues from elsewhere have fallen so much, that's now having a much bigger impact in in sort of separating what is earning probably an okay amount with what's probably earning, below what they'd be offering.

And And we we've we've done all this. We haven't even talked about the balancing mechanism. Wendell, your favorite topic.

Do you wanna just riff on what's going on with the balancing balancing mechanism?

Because there's a lot happening, and there are many reasons to be cheerful.

So in general, you know, the balancing mechanism outside of sort of an increase in wholesale volatility, which we expect to slowly happen, but year on year, who knows what that would actually look like. The balancing mechanism is where we would expect to see revenues grow. The reason for that is sort of the numbers behind the balancing mechanism are kind of pretty bonkers. It's what's driving sort of the entire of the the RIMA process. It's this this obvious view that we are having well, the control room is having to redispatch. I think they say up to, like, fifty percent of generation at times. Yeah.

What what do you mean by the numb the the numbers are bonkers?

Is it the the the pounds or the megawatt hours or the what is it? What's the bonkers bit?

We we did the numbers on this, like, kind of late last year and sort of on, like, an average continuous basis. So this is con it's not really it doesn't really happen like this in real life, but there's about three gigawatts of sort of continuous sort of up and down actions happening in the balancing mechanism.

The it's the continuous aspect of that which makes that enormous, like, when you look at it on terms of energy volume.

And that's all the plan at the margin. Right? Because you've got a load of base load nukes that don't move, really, and you've got a load of renewables that will will run if you can let if if if there's wind. Also, like so the what what's what's fascinating is of a system that often only has thirty gigs of demand, you you got ten percent of that is being redispashed. Oh, and then by the way, of that thirty gigs, half of it never moves anyway. So it's even it's an even bigger percentage.

That depends on what when it is as well. Like, when it's windy so let's say kind of two weeks ago, you'd you could see up to, like, six gigawatts of wind being turned off and then six gigawatts of mostly kind of gas plant being turned up.

This is the bad thing, isn't it? This is this is this is like it. This is yeah.

So this is kind of the the issue of constraints. We don't have enough transmission capacity to get all the wind down from Scotland to sort of London.

You'd explain it.

You know, it all sort of makes sense rationally.

But, like, if you're gonna write it if you're gonna tell someone down the pub about it, it's about it.

Yeah. And so if we of that, like, kind of three gigawatt number we had, about half is the are these kind of system actions. So solving constraints, solving kind of, yeah, voltage problems.

But then the other half is actually just kind of like continuous energy balancing. So that's basically balancing supply and demand when so, yeah, it might be a gas plant kind of trips when it's ramping or sort of wind generation is a bit later to kind of increase than what was forecast.

So even just that on its own is still a pretty sort of massive, requirement of of energy.

And the reason this is important for batteries is that, I mean, to date, there's this been this problem of this thing called skip rates. Essentially, batteries just not getting used as much as they could do for for a lot of that volume despite often being one of the lowest priced kind of solutions.

And being skipped in the merit order. Yeah. So skipped there just means, essentially, something that was more expensive was used instead. So quite frequently, that could be turning up, sort of a gas plant, but it could it's actually a lot of time also, like, using pumped hydro.

And this is outrageous. Right? This is outrageous. I wanna go hard about it. This is this is insane. Right? There must be a good reason for it.

I think well, yeah, it it's hard. Like, within the kind of the way that the control room works, you've got so, yeah, control engineer engineers making decisions, making manual dispatch instructions to these assets. This is sort of like a system which, like, the shape of that hasn't really changed, or I don't know, really, for, like, probably twenty years or so.

But it it is easy to throw the control engineers under the bus, and I don't think like, but we should get one of those on because I bet it's wet. It's there's a lot more to it. Yeah. Or we know there's a lot more to it. Right?

To to sort of look at in context, like, if I need a very short term amount of, like, site like, let's say five hundred megawatts, what I could have done before if I was in the control room is go and sort of tell, you know, maybe ten to fifteen different batteries, okay, I need you for this amount. Then each of those, they need to create, like, an instruction for and send that. Each of those might take thirty seconds to do. Very quickly, you've run out of your your minute, two minutes that you need to make that get that action in time for. So instead, they tell to Norwig to deliver it in one big go instead. And that kinda makes sense.

Like, it's not a The buzzword bingo for blaming Denawigh for blaming the control room, blaming the Norweg.

And I think that's the thing. It it that makes sense within the kind of constraints of of what's being available to those engineers in the control room.

So they gotta keep the lights on. Yeah. And they've got a tough job and there's loads of stress and actually would you rather get that power from one place or fifteen, twenty different places?

Yeah.

And so By the way, we also don't want the lights to go out.

So it's all very well complaining about this, but what would be even worse is if they did their job badly and the lights went out.

Yeah. And what has been positive is, I think it was, yeah, beginning of December, we saw the launch of the open balancing platform. And so this is kind of like the next generation of, like, compute systems within the control room, which is attempting to kind of solve this problem. It's basically creating better tools, better sort of just, like, underlying software that can deal with the problem of having to dispatch more and more sort of volume, but also just more and more, like, actual, like, units.

And so that came with this thing called bulk dispatch, which essentially means that a control engineer can so in that example of that, like, needing five hundred megawatts, they just can draw they can say, okay. I need five hundred megawatts, fifteen meg fifteen minutes.

They put that into the algorithm, and the algorithm will say, okay. Here is the least cost option. I can get that for you, and I'm gonna send all those instructions to maybe say twenty, thirty, forty, fifty battery units, and then they get that response. And so that is sort of I mean, it's pretty fundamental change to to how these different technologies can be used in the control room. The other thing we've had is the start of the sort of, yeah, recognize a recognizing that batteries have been limited in the the duration of dispatch they can be used for. So there's been this thing called the fifteen minute rule, which essentially just means that the control room could only know that they could, you know, instruct a battery for up to fifteen minutes.

It's actually a rule. Everyone talks about the fifteen minute rule. Is it just a thing that's that everyone calls it calls it, or is it has someone written it down somewhere as a rule?

That's a good question. The thing is with it is it actually hasn't been stuck too rigidly. At times, we do see longer kind of dispatches happen as a whole. You can sort of treat it that batteries won't get dispatched from that, which is a problem because actually most of sort of energy balancing actions are half an hour long. And so in March, we saw the change to thirty minute rule. So batches can now be dispatched up to thirty minutes. It's not quite perfect, but there's kind of more stuff happening this year.

Well, what should be what's the right number? I don't really like rules in general, but if we're gonna have one, should it be a thirty minute rule? Should it be an hour long rule? Should it be a twenty what what's the right number?

I think the right number is there's no rule. There's no the right number is there's no rule. The right number is that the control room sees how much energy each battery has, and some sort of algorithmic dispatch can then work out how long it could dispatch it for. And that is where they're aiming to get to. So at the end of the year, there's kind of a few grid codes mods going on, looking very hard at this, like, whether it will actually solve that problem, we need to wait and see.

So no rule is what we're aiming for.

No rule. Yeah. I think that's what I think yeah. The the most optimal place for us to get to is where like, the fact is there have been a lot of these walls and things which actually, on the surface, don't even realize are there, that have been probably blocking how certain technologies can be used in the balancing mechanism.

And we want to get to, and I think if you speak to the people who are running that kind of open balancing platform, it's where they want to get to as well. Basically, getting rid of those rules, and technologies can compete on the laying level playing field. So is that it then?

So if we go to the the no the no minute rule or what?

We get rid of the thirty minute rule. There is no rule.

Then is that it? Is this is this is this the big thing that's gonna unlock loads of volume and price for batteries in the balancing mechanism?

I'm gonna say no because what we're seeing with the open balancer platform, with bulk dispatch, with the change to thirty minute rule, the move to no rule, it's just getting rid of some of these technological barriers that were in place. But because of the way the control room works, it's still sort of essentially run manually.

There's a lot of actual kind of decisions that are taken on a human level that need to change.

But Do you mean skip rate?

So, yeah, essentially essentially, in that in in that scenario of the per of the engineer deciding to dispatch to Norweg rather than sort of, yeah, twenty, thirty individual battery units.

I think what they should do is give these guys bonuses based on maybe the the carbon cost of the actions they're taking. That would be the best one, I think. Or if they wanna get more batteries used, then that should be part of the bonus plan or something. I don't know. You could end up with weird incentives and fear that the lights would go out, but I just don't I don't get it. If we're if we do we get rid of this thirty minute rule and we've got bulk dispatch, what what reason is there to skip a battery?

Well, that's the thing. I think you're getting rid of those kind of Apart from system technical technical reasons as to why you would previously not skip.

And then I think, yeah, then you'd hope that there's enough kind of pressure from an economic perspective or carbon perspective to basically, yeah, to just make sure that you are expanding how you use this technology.

I think, yeah, it it's kind of you you see everywhere. It's just kind of like there's general, like, you know, resistance to change. There's, like, an inertia to to sort of change happening.

All very well. Because if you're buying more expensive plant instead of cheaper plant and more carbon intensive plant instead of cheaper plant, and all the reasons that you have to do that have gone away, then there's a let's see where we get to.

So for for me for me, I think the the big thing is that So I got a bee in my bonnet about that. Yeah. For me, I think the big thing is that we are gonna see this year the sort of amount of batteries available in the balance mechanism just go up and up and up and up. The more every sort of megawatt more we get our capacity now, it's not going into frequency response. It's just going into the balancing mechanism.

And it's gonna cut to a point where, you know, the control room will have to basically adapt and really shift sort of their behaviors to use battery storage.

We should do the petition to change the name from balancing mechanism to the battery mechanism because it's gonna happen, and if we just get it out of the way now, then we can make a point.

Yeah. If you look at all that energy balancing stuff, there's no reason why you couldn't just do that with batteries.

The battery mechanism. Yeah. It's all it is. It's all it is. We talked about most different markets now.

I think we've covered everything. But we are in a period of lower revenues. It's pretty rough out there the last few months, but some assets are doing better than others, and location really matters. And we're excited about what's happening in the BM.

Is there anything else we need to talk about, particularly about the future?

I think if we look at this year, I think I think, yeah, we we've had this sort of slightly contradictory period where, in theory, the winter should be the most valuable period for batteries. But, actually, potentially, this year is gonna be the least valuable because as we kind of go into spring, summer, we see kind of we see actually increasing spreads because of negative pricing.

This is your favorite topic of all of you.

I love negative pricing.

And, yeah, I mean I mean, in the context of lower demand, more renewables, you know, last year, we had a record amount of negative pricing.

So four percent, I think, wasn't it, last time?

Yeah. I think it was, like, seventy eight hours of, like, zero or negative pricing last year.

For the whole year.

For the whole year. And and so what that does for batteries is it creates spreads in the times when demand is sort of low as well as high. And I think that's the one kind of positive aspect for batteries is that, you know, even in a sort of lower demand, sort of high generation high renewable generation sort of world we may be in right now, there's still some value for them there. Whereas, you know, if I'm sitting on a gas peaker, I can't run all summer.

So that's my short term view. I think, yeah, we'll actually see the index probably increase increase into the summer. Because you've got the spreads, they just move further down. They're they're they're around the zero mark, not around the hundred pound mark or whatever.

And then beyond that, I think, yeah, it's just a case of of watching what happens in the balance mechanism. The battery mechanism. The battery mechanism. Thank you.

I want a dollar for every time someone uses that now.

Well, that was fun, Wendell. We're gonna do this again in probably six months' time after the summer period and see whether we were right about your your negative pricing and see what else is happening, particularly in the gas market. But for now, we'll leave it there.