We model two battery dispatch strategies to reflect different risk profiles

Battery revenues are now operated with a ‘merchant focus’ or an ‘ancillary focus’ strategy. This replaces the ‘merchant only’ and ‘merchant & ancillaries’ strategies in model version 3.0.

Previously, the ‘merchant & ancillaries’ scenario was optimized at the day-ahead stage to minimize risk, contracting battery capacity into frequency response contracts with guaranteed revenues.

The new ‘ancillary focus’ strategy contracts considers the opportunity in the Balancing Mec revenues are likely to be high the following day. This strategy is higher risk, as the battery may not be dispatched, but potentially higher reward.

For the merchant focus strategy, the battery is optimized in:

• Day ahead half-hourly wholesale markets
• Balancing Reserve, reserving available headroom and foot room for the Balancing Mechanism
• Intraday markets, capturing non-physical trading and churn
• The Balancing Mechanism
• Capacity market & TNUoS revenues are also given.

For the ancillary focus strategy, the battery is optimized in:

• Dynamic Frequency Response services
• Day ahead half-hourly wholesale markets
• Balancing Reserve, reserving available headroom and foot room for the Balancing Mechanism
• Intraday markets, capturing non-physical trading and churn
• The Balancing Mechanism
• Capacity market & TNUoS revenues are also given.

For both strategies, we de-rate the amount of cycling by 30% post-2027 to enable systems to capture more revenue uplift in the BM. Why 2027? because that's when all the changes to control room infrastructure should be complete, meaning there will be more certainty of dispatch in the BM then.

We still de-rate, even though the dispatch model gets an indication of the value of the BM at day ahead. The actual value of the BM within-day is a more complex calculation depending on state of charge, cycling, constraint levels across any boundaries due to demand and wind, competition from other assets, etc. We get slightly higher BM revenues by derating cycling in this way.