v3.1 release: changes since v3.0

In this release, most of our changes involve updates to the dispatch model, impacting BM revenues. We have only made limited changes to the fundamentals model and we have updated battery CAPEX.

1. Added Balancing Reserve

Batteries doing both merchant-focussed and ancillary-focussed strategies are now able to participate in Balancing Reserve.

This new service was launched in March 2024 and has seen participation from batteries, as well as gas peakers and CCGTs.

Revenues from Balancing Reserve are small, but it ensures flexibility is reserved for use in the Balancing Mechanism during the delivery periods.

The impact: we see higher BM revenues, as well as a new line of revenues from Balancing Reserve.

2. Updated BM dispatch rates with the latest we observe across operational battery sites

Significant progress has been made in the dispatch rates of operational battery storage in the Balancing Mechanism, with rates above 9% (on average) across April, May, and June 2024.

We have updated the locational dispatch rates at the start of the model in the latest release to reflect this.

The BM revenues to 2027 are now higher.

3. A revised indication of BM revenues in day-ahead strategies

Previously the model producing our ancillary-focused strategy had no foresight of revenues available in the Balancing Mechanism. We now give it (and the merchant-focused strategy) an indication of what BM revenues will be.

The result is higher BM revenues in the ancillary-focused strategy, as more flexibility is reserved for the BM. This also means that the ancillary-focused strategy now returns higher revenues than the merchant-focused strategy for shorter-duration systems.

4. Removed ramp rate restrictions to batteries doing frequency response

The ESO has signaled that it will remove existing ramp rate restrictions, which limit the change in power per minute to 5% of any contracted frequency response volume (in the other direction) for batteries.

The impact is that merchant revenues are now 12% higher to 2027, as batteries are not limited by how much they can charge up while performing frequency response.

5. Updated TNUoS revenues for both distributed and transmission sites

5a. Added wider generation TNUoS as standard to transmission connected BESS

We use the ESO forecast of wider generation tariffs published in April 2024 to forecast TNUoS costs for distribution connected sites greater than 100MW, or those connected directly to the transmission system.

These use projected values of Annual Load Factors, depending on the strategy of the site, which are important in determining the rates.

The impact is that transmission-connected or large sites now have a non-zero TNUoS revenue.

5b. Updated Embedded Export Tariffs to consider battery duration

Using historic data on how well battery sites of different durations hit triad periods, we apply a capture rate to Embedded Export Tariffs to get a more realistic estimate of the rates they actually receive for exporting during winter peaks.

We have also updated the forecast values of the tariffs given the latest 5-year forecast from the ESO.

The impact is that distribution-connected or large sites now have smaller TNUoS revenues.

6. Updated battery CAPEX & near-term buildout

In a change to our capacity expansion model, we have reduced the CAPEX of new-build battery sites by 30% compared to the last version. We have also reduced the amount we expect to be built each year. This is in line with recent market data.

We have also updated the build-out of BESS to 2027 in line with the latest Modo buildout report, which reduces the total capacity to 2027.

The impact is that we get a slightly higher BESS buildout by 2050, and more longer duration systems.

7. Updated commodity prices

We have updated gas prices in line with the latest curve from CME.

The impact is minor.

8. Fixed an issue in discontinuities in the battery fleet's state of charge within the fundamental model

The way the model is parallelized led to a jump in the state of charge of the storage fleet every 196 days. This had more of an impact towards the final years of the forecast, when the storage fleet gets larger - as it meant there was more 'free' energy coming onto the system at those points.

We have now removed these jumps and the impact is that the tail of average power prices sits closer to £25/MWh than £20/MWh.

9. Updated solar load factor year to align with wind

We now use 2018 for both the wind load factors and solar load factors. The two are correlated, so it's good to be consistent across both when using these load factors to forecast future years.

10. Updated degradation curve and repowering

We have updated our standard degradation curve to be more in line with cell manufacturers current estimates for new systems. In parallel, we have changed our run library re-powering default to 10,000 cycles (previously 8000 cycles).