As an update to our previous Chart of the week back in October last year, when we looked at the revenues generated by the then operational battery storage assets, this week’s Chart of the Week examines if these revenue streams have changed and what the drivers behind those changes are.
At the time, there were four operational storage assets in the National Electricity Market (NEM), since then we have seen the introduction of Lake Bonney at 25 MW/52 MWh battery.
We have seen a number of projects announced over the past four months. AGL has announced 200MW of storage with Maoneng and a further 100MW in Queensland, Neoen has also announced an upgrade to the Hornsdale Power Reserve (HPR) by another 50MW.
Lake Bonney interestingly is trading the most in the energy market compared to the other battery storage assets, except perhaps Gannawarra. Lake Bonney has only actively begun trading in all markets since November 2019. It is interesting to see that only 5% (~$56,000) of revenues in December 2019 for Lake Bonney were from contingency services compared to HPR which made more 20% ($400,000) from those services. The batteries are of similar capacities but it should be noted that HPR has access to much more energy (i.e. duration). HPR total revenues were ~3x more than Lake Bonney in FCAS, but revenues from energy were similar. This difference in operation of the two batteries highlights the divergence in revenues that can occur from marginally different operation strategies.
Gannawarra’s revenue profile is significantly different to our last Chart of the Week which showed it making almost 100% of revenue from the energy market. From around July it appears that Gunnawarra finally received access to the FCAS regulation market and has been very active in regulation FCAS since.
Shoulder months August, September, October and November are the best months for FCAS revenues with energy predominantly a summer value stream. The main markets being the 6 second and 60 second FCAS markets.
Energy arbitrage is still a much smaller part of the revenues generated with the majority of revenues generated in the raise regulation and raise 6 sec markets. Dalrymple and HPR made 30% and 28%, respectively of their total annual revenues in November, predominantly from the FCAS raise 6 sec contingency market.
In the energy markets the arbitrage spreads are clearly much higher during the summer periods. We see that 77% of total annual revenue from energy sales occurred over the extended summer period including Jan, Feb , March and December.
What is clear is that energy arbitrage alone is not sufficient to make sufficient revenues. FCAS markets are far more lucrative, but we also see that the manner in which the battery is operated and the strategy employed can significantly determine revenues received. We look at this and much more in our training course next week on the 4th March, “The rise and role of flexibility in the NEM”.