Batteries had a profitable run in ERCOT this spring. Can it continue?

Sean Wolfe | Source: Renewable Energy World | Posted 08/02/2024

ERCOT’s battery energy storage system (BESS) market had a profitable spring – in May, batteries in Modo Energy’s ERCOT BESS Index made an average of $158,000/MW, annualized. This was the highest monthly average for its ERCOT BESS Index this year, Modo Energy said, with May revenues not only surpassing previous months, but sitting at 30% more than February, March, and April combined. Modo Energy said that these revenues represent a 295% increase over the same period last year.

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ERCOT’s battery energy storage system (BESS) market saw a lucrative spring, with batteries in Modo Energy’s ERCOT BESS Index bringing in an average of $158,000/MW, annualized in May. This marked the highest monthly average of the year for Modo Energy, with revenues in May surpassing the total for February, March, and April combined and representing a 295% increase over the same period last year. The increase in revenue in May was largely driven by ERCOT Contingency Reserve Service (ECRS), energy, and non-spinning reserve.

While battery systems in ERCOT earned 23% of their revenue from energy arbitrage in both May 2023 and May 2024, the remaining 77% was generated from ancillary services. Longer-duration systems, lasting around two hours or more, outperformed short-duration systems in May, earning 28% higher overall revenues, with ECRS, non-Spin, and energy arbitrage contributing to the advantage observed by Modo Energy. However, concerns are rising about a potential battery bubble forming as markets evolve slowly, leading to consolidation and uncertainty among investors and developers.

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Batteries had a profitable run in ERCOT this spring. Can it continue?

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