Balancing Mechanism revenues for batteries

We model battery revenues from the Balancing Mechanism.

• Our projected supply stack gives bid-offer pricing,
• Dispatch rates are projected using ESO control room improvements and transmission network infrastructure build-out,
• Locational differences in dispatch rates by Grid Supply Point (GSP) group or Distribution Network Operator (DNO),
• Site-specific availabilities for dispatches in the balancing mechanism, given day-ahead traded positions as per the dispatch model.

Model accepted Bid Offer pricing using the fundamentals supply stack

We vary demand to get a new marginal price to get a bid-offer price per half-hour period. This assumes a minimum spread between the offer and bid price (£35/MWh) that reflects the historic average bid-offer spread. This minimum spread is pretty conservative.

BM dispatch rates

Current dispatch rates for battery storage are around 3%, but vary by location. The Open Balancing Programme of works (until 2027) will improve systems in the control room. As a result, this rate should improve significantly by 2027. We expect to see further improvements in dispatches as transmission infrastructure gets built out to 2040.

Availability for BM dispatch

Given the day-ahead position (charge and discharge profile), we calculate the availability to change power output:

• The headroom, ie, the power a system can charge at, dictates the availability for bids
• The footroom, ie. the power the system can discharge at, dictates the availability for offers.

We do not 'optimize' in the BM: we assume an average dispatch rate for bids and offers, and that energy is overall conserved over the day. Our calculation intends to ascertain the 'average' revenue on offer over the day.

In reality, there will be a distribution of bids and offers during the day. Day ahead positions will be bought back, and it is likely to get a series of bids or offers at certain times rather than a (roughly) equal spread in each settlement period.

Given the site's availability, and the dispatch rate (particular to that region), we calculate an expected bid and offer dispatch MWh per half-hour period.

Multiplying this by the bid-offer price in each period, we arrive at the BM revenue of the site.