How top performing storage assets in ERCOT operated during the August 2023 heatwave, and how operating strategy impacted revenue outcomes.

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It is no secret, Texas gets hot in the summer. With the high temperatures comes high energy demand, and therefore high revenue opportunities for energy storage operators. 

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Given what an important time this can be for storage assets, we investigated how top performing assets approach operations in these periods. After analyzing ERCOT’s 60-day disclosure data throughout Summer 2023, we found that batteries tend to take one of two approach:

1. Ancillary Services (AS) Focused: The majority of operators fall into this category. They run a similar strategy, bidding predominantly into ‘up’ AS products across most hours, day-over-day.
2. Balancing Energy with AS: Assets that performed best throughout the heatwave adjusted their daily strategies, balancing AS with energy arbitrage.

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Strategy deep dive:  

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AS-focused:

Operators in this bucket ran similar bidding strategies day-over-day. Without much (or any) variation to account for ever changing grid conditions, they stacked ‘up’ (Reg Up, ECRS, reserves) obligations in consecutive hours.

While this simplifies your day-ahead bid strategy and can provide consistent payments throughout the day, it adds complexity to your real-time operations and carries risk. This risk can manifest in two ways:

1. Inability to capture high energy prices due to existing commitments for the battery’s capacity 
2. Getting the AS obligation called more, or to a greater extent, than expected leading to penalties

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While ERCOT does not report on the latter, the former is precisely what happened to many operators on 8/26 - a day when energy prices cleared $3K/MWh.

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Balanced, Bespoke Daily Strategies:

This subset of operators adjusts their operating strategy each day, providing the flexibility to maximize revenue by bidding into the mix of market products forecasted to deliver the highest returns.

This approach requires a more dynamic approach along with highly accurate price forecasting, but unlocks the highest potential revenue and protects against state of charge missteps. In this case, it enabled operators to discharge into the $3K day-ahead energy price spike, and deliver on the Reg Up and Reserves obligations that were offering similar prices in the surrounding hours. The end result was daily revenue ~20% higher than the operators featured above running an AS-centric strategy.

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Every day is different in the Texas energy market. To truly maximize revenue, BESS operators need technology as dynamic as the market.

Interested to dive deeper into the strategies of leading operators from this summer? Connect with one of our experts.