Modo Energy - USA

Energy grids and markets are evolving fast. What’s fueling the expansion, and where are the bottlenecks, and how do newer demand users like crypto miners impact energy demand and market behavior? In today's episode, Ali Karimian, Market Optimization Director at GridBeyond joins Quentin 'Q' Scrimshire to explore how storage is making revenue in ERCOT, CAISO and PJM, as well as the role of cryptocurrency miners in energy markets, and how these unconventional players can be advantageous for grid stability. Some of the key topics explored in the conversation include: ▶︎ The differences between some of the most prominent markets for BESS in the United States, including ERCOT, CAISO and PJM. ▶︎ The current landscape shaping market attractiveness for battery operations. ▶︎ Policy & regulatory changes affecting ISO’s including changes to ERCOT's ancillary services framework, PJM capacity market dynamics and continual updates for CAISO. ▶︎ The rise of crypto miners in energy markets and what characteristics make them suitable for supporting grid stability. ▶︎ Strategies enabling crypto miners to lower effective power costs. You can listen to this episode - and every previous episode of Transmission - on your favorite podcast app, and on the Modo terminal.

Battery energy storage systems in ERCOT earned average annualized revenues of $42/kW in October. This represented an 88% increase from September, which had been the lowest revenue month for batteries in ERCOT since February 2024. This was despite the average net load decreasing by 17% from September to October, which typically would coincide with lower prices and, therefore, lower BESS revenues. However, daily average peak Real-Time Settlement Point Prices at the Bus Average Hub were 32% higher in October than in September, at $114/MWh. The accompanying chart illustrates the shift in pricing outcomes, as prices tended to rise above $100/MWh at lower net load levels than in September. For instance, the Bus Average Hub SPP rose above $100/MWh when net load was less than 50 GW eight times in October. In contrast, the Bus Average Hub SPP never rose above $100/MWh when net load was less than 50 GW in September. This was largely driven by thermal generation resources being able to begin their planned maintenance. Throughout the month, there was an average of 17.3 GW of thermal generation capacity on outage. This represents a 141% increase from the September average of 7.2 GW. By the end of October, nearly 23 GW of capacity was out of service on some days. When more generation is out of service, generation with more expensive offers to provide Energy is dispatched at relatively lower levels of demand. This then results in higher prices at comparable levels of demand seen in months with less generation on outage. Check out the rest of the article in the comments below to learn: -which batteries earned the highest revenues in October, -how battery energy storage owner portfolios compared by revenue, -and how BESS revenues varied by region. #BatteryEnergyStorage #ERCOT #PowerPrices

In 2024, 72% of wholesale revenues for grid-scale batteries in CAISO came from day-ahead energy arbitrage. However, the opportunity to earn these revenues varied across the grid. Since CAISO operates with locational pricing, each node on the network provides a different spread for batteries to take advantage of. By examining nodal prices across the system, we can identify locations that offer the best arbitrage opportunities. Generally, the highest spreads are found in the SP15 zone covering Southern California, and average arbitrage revenues have been consistently higher here for the past five years. However, when it comes to individual nodes, most of the top-performing outliers are actually located outside of SP15. You can read the full article to learn about the nodes that provided the largest opportunities for day-ahead arbitrage and the factors driving these price formations in California. Link in the comments

In September, battery energy storage revenues in ERCOT varied from $8/kW to $96/kW. Revenues varied substantially even among systems with the same size and duration specifications. In addition to location, the ways in which operators commit their battery's capacity have a substantial impact on both revenues and cycling. For instance, Republic Road, Ebony Storage and Flower Valley 2 are all 50 MW, two-hour systems. In September, their annualized revenues ranged from £13/kW to $46/kW, while cycles per day ranged from 0.15 to 0.75. This was because of distinct operational strategies - high Ancillary Service commitment vs prioritizing Energy arbitrage. Within Energy arbitrage, deciding whether to prioritize the Day-Ahead Market and DART trading vs. a Real-Time Market plays a huge role, as of course does the location of a given battery. In the case of these three systems, more cycling correlated with more revenue in September. Read more via the link in the comments.

In September 2024, battery energy storage systems in ERCOT earned 58% of their revenues from Energy arbitrage. And the top-performing batteries earned 80% or more of their revenues from Real-Time Energy, in particular. This was due to large daily average price spreads in the Real-Time and Day-Ahead Energy markets, averaging one-hour spreads of $57/MWh and $46/MWh, respectively. In our September Operations article below, we share the daily operations of batteries in ERCOT, comparing their performances and cycling rates. We take a close look at the operations profiles of three individual batteries, all large two-hour assets, that performed very distinct strategies, and compare and contrast the operational effects of each. Plus, we deep dive into the operations of an outlier battery energy storage system, which was able to successfully outperform the ME BESS ERCOT Index by more than 300%, all while cycling an average of just once every eight days. Check out the full article here: https://lnkd.in/gBvqyb-k #ERCOT #BatteryEnergyStorage #EnergyArbitrage

Standalone battery energy storage systems have - on average - the highest net qualified capacity to provide Resource Adequacy of any technology type in CAISO. This is largely due to the fact that most batteries in CAISO have been built with a four-hour duration, i.e., their energy capacity (in MWh) is around four times higher than their rated power (in MW). The four-hour duration enables batteries to qualify nearly 100% of their rated power as eligible capacity for a Resource Adequacy contract in CAISO. This is critical, as Resource Adequacy payments make up a substantial proportion of the business case for battery energy storage systems in CAISO. Read Ovais Kashif's full article in the comments below to learn more about what California's Resource Adequacy Program is, how it works, and the ranges in which contracts have historically been priced. #CAISO #ResourceAdequacy #BatteryEnergyStorage

Total installed capacity of battery energy storage in ERCOT has grown by more than 80% so far this year. 3.4 GW / 4.8 GWh of storage capacity have become commercially operational in 2024, with around 1 GW and 1.3 GWh of that capacity coming in October and November alone. Additionally, over 2 GW of capacity has received approval to synchronize to the grid, but has not yet received approval to begin commercial operations. Most of these projects will enter full commercial operations in the next three to six months, indicating that the rapid capacity growth that's happened in 2024 is set to continue into 2025. #ERCOT #BatteryBuildout #GenerationCapacity

Between October and November, fourteen new battery energy storage systems became commercially operational in ERCOT. Installed capacity increased the most in the West and North Load Zones, shown on the map below in red and yellow, respectively. Between October and November, more than 450 MW of new battery energy storage capacity was completed in both the West and the North. In total, capacity grew by just over 1 GW of rated power, or 1.3 GWh of energy capacity, in the past two months. This brings the total installed capacity to nearly 7.5 GW, or 11 GWh, through the end of November. With six of the fourteen new batteries having a rated power of more than 100 MW, the size of the average battery energy storage system continues to increase - now to nearly 50 GW. This has been the biggest enabler of the continually increasing pace of the battery buildout in ERCOT. If around 600 MW of capacity receives approval for commercial operations in December, the total installed capacity will have doubled for the third year in a row. #BatteryEnergyStorage #ERCOT #Capacity

Though battery energy storage systems listed on Modo Energy’s ERCOT BESS Index earned annualized average revenues of just $22/kW in September, the range of revenues earned by different batteries was substantial. One battery was able to earn annualized revenues of $96/kW over the course of September. This was over four times the ME BESS ERCOT Index, and 39% more than the battery that earned the second-highest revenues. This was because this battery benefitted from prices at its settlement point rising above $1,000/MWh on multiple operating days toward the end of the month. While local prices were high, system prices stayed below $200/MWh. This highlights the potential variance in revenue opportunity as batteries begin to earn a larger proportion of revenue from Energy arbitrage, as can be seen in the attached image. September's record-low average Ancillary Service clearing prices of just $1.93/MW/h translated into the first-ever month in ERCOT where more than 50% of revenues for battery energy storage were earned through Energy arbitrage. As this becomes more common, batteries that are exposed to higher Energy arbitrage spreads through divergent price formation caused by transmission congestion will more often be those that earn the highest revenues - as opposed that were able to come closest to the optimal configuration of Ancillary Service responsibility in any given month. Though the battery with the highest revenue in September is an extreme example where an isolated and localized congestion incident resulted in a small number of nodes having outsized Locational Marginal Prices, this highlights the role that congestion plays in the revenue opportunities for batteries and other types of generation in ERCOT. Head to the full article in the comments to learn more about how grid-scale battery energy storage revenues in September shook out in ERCOT. #PowerPrices #ERCOT #Transmission

In September 2024, for the first time ever, battery energy storage systems in ERCOT earned more than 50% of their revenues from the Real-Time and Day-Ahead Energy markets. Batteries earned annualized revenues of $22/kW in September, which was a 75% decrease from August. This large reduction in monthly revenues is in line with the record-low average Ancillary Service clearing prices seen in September, which fell to just $1.93/MWh, averaged across all services for the month. As saturation continues in Ancillary Services, it is critical that owners and operators begin prioritizing Energy arbitrage, both intraday trading and DA/RT optimization. To learn which sites have been able to do this effectively, as well as how individual owner portfolios stacked up in September, check out the full Benchmark article in the comments! #ERCOT #BatteryEnergyStorage #Revenues