Dr. Kai-Philipp Kairies working in a meetingDr. Kai-Philipp Kairies working in a meeting

This paper will explain:

Additionally, the UK BESS market contains a bit of irony: The energy transition that BESS is supporting is designed to reduce the frequency and severity of volatile weather events related to global warming. Yet, it is the same volatile weather events that drive more favorable trading conditions.

Unfortunately for BESS owners, the UK experienced fewer extreme events than expected over the last year. So, what does this mean for market participants? These conditions have produced a perfect storm and, consequently, one vital issue for BESS owners – shrinking revenue stack.

The question now is, how do we overcome this, and more importantly, how do we drive revenue when the odds are seemingly stacked against us? One obvious option is to reduce operating expenses to improve the bottom line – a common tactic for many companies. However, there are several alternative options that we’ll explore below:

1.  Find the hidden revenue opportunities

Opportunities still exist. MODO Energy reported that Wholesale revenues in March increased 25%, helped by negative pricing on 24th March, which caused day-ahead spreads to reach £93/MWh. Without solid data analytics, many market opportunities would be nearly impossible to find and capitalize on.

MODO Energy Chart showing BESS revenue increased by wholesale spreads in March 2024

Though widely applicable, using data analytics is not a novel concept in times of uncertainty. Just as the quant traders doubled down on leveraging historical and real-time market data to find opportunities during the 2008 credit crisis, data scientists in the FMCG market used additional data sources to understand how consumer behavior changed during the 2020 pandemic.

Now, BESS owners can use analytics to capitalize on favorable market conditions and avoid performing maintenance and downtime during these volatile, and oftentimes fleeting moments. For example, by combining BMS data with powerful cloud computing, BESS owners can optimize their system’s performance, identify imbalance issues, and pinpoint State-of-Charge (SOC) estimate errors. Asset managers can use this information to schedule maintenance during times when it will have less of an effect on revenue.

Data analytics combined with services like MODO Energy, enables market participants to understand the wider market performance and make more informed decisions.

 

2.   Diversify revenue streams

Diversification of investments is common practice throughout financial markets, and for good reason. It reduces the negative impact of market volatility while simultaneously increasing the potential to capitalize on the upside. As we discussed above, using insights from services like MODO Energy can enable BESS owners and market participants to identify different revenue streams in the UK market and diversify.

Diversification can also include operating in different markets outside the UK. In the world of BESS, the wider the geographical diversification, the better the chance of capitalizing on an extreme revenue event.

 

3.   Leverage BESS experts

Energy storage is a relatively young industry. Many BESS owners are commissioning their first assets, just as many manufacturers and developers are new to the industry. This combination means there is an increased risk of something going awry. However, there are many companies who can provide support to drastically reduce that risk. For example, consultancies and tech solutions can help optimize assets during BESS commissioning, so you can capitalize on revenue opportunities.

Identify the best-in-class experts and use them.

 

4.   Collaborate with UK industry leaders

Perhaps the least obvious choice, collaboration can help navigate the storm of less favorable conditions not only for individual survival but also for the greater good of the entire market. The UK BESS market is small enough that participants can share stories of successes and, more importantly, mistakes they have made.

Throughout this year, ACCURE is hosting several roundtable discussions, aimed at sharing collective knowledge to drive market success. Please contact us if you want to participate.

5.   Innovate with the latest technology

Innovation is a disrupter, and the BESS market sees plenty of innovation to support asset owners. For example, HDI Global announced that its leveraging monitoring and predictive analytics solutions to reduce the risk associated with owned battery storage assets.Specifically, it’s identifying potential safety incidents well before they happen so maintenance teams can address them proactively. The result is that they can now offer preferred insurance terms with assets leveraging such technologies.

It might seem counterintuitive in a time of lower revenue projections to impact P&L margins acquiring additional services. But as the saying goes, “knowledge is power”.  With the additional knowledge identified above, asset managers can make more informed decisions that drive an estimated 5-15% increase in revenue. With the rollout of renewable energy set to increase significantly over the next 10years, the opportunity and flexibility in revenue generation for BESS owners increases as well.

Steve
Higgins
Director
About the author

Steve

Higgins

Like many at ACCURE, Steve has an engineering background with nearly two decades of experience in data and analytics. Having started his career in financial services supporting investment banks and asset managers with data solutions, he transitioned in to renewable energy 6 years ago. As a director, Steve's focus is to scale ACCURE's commercial success through new business acquisition, establishing new territories and supporting the growth of its existing customers.

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About ACCURE Battery Intelligence

ACCURE helps companies reduce risk, improve performance, and maximize the business value of battery energy storage. Our predictive analytics solution simplifies the complexity of battery data to make batteries safer, more reliable, and more sustainable. By combining cutting-edge artificial intelligence with deep expert knowledge of batteries, we bring a new level of clarity to energy storage.  Today, we support customers worldwide, helping optimize the performance and safety of their battery systems. Visit us at accure.net.