How a battery makes money in Great Britain
Nothing here is behind a sign up. If you are new to this market, start with this. It is written for someone who understands a business but has never had to think about how electricity is bought and sold.
The one sentence version
A battery buys electricity when it is cheap, sells it when it is dear, and gets paid separately for promising to be available in case something goes wrong.
Everything else is detail. But the detail is where the money is, and it is where almost every published number goes wrong.
The four ways it earns
1. Being paid to stand ready
The grid has to match supply and demand second by second. If a power station trips off, something has to fill the hole within seconds. So the system operator buys promises: be ready to push out 20 megawatts within one second if I call. You get paid for the promise whether or not you are called.
These promises are bought in daily auctions. Everyone who wins gets the same price, so there is no advantage in being cheapest, only in being cheap enough to clear. This is the most reliable income a battery has, and it is falling, because far more batteries now chase the same fixed pot.
2. Being paid to change what you are doing
Closer to the moment, the control room finds itself with too much power in one place and not enough in another. It can then instruct individual units to turn up or turn down. A battery that is told to turn up gets paid for the electricity it puts out. A battery told to turn down pays to take electricity in, which sounds like a cost but is often the cheapest stock it will buy all day.
This is called the balancing mechanism. It pays well and it is unpredictable, and it is heavily concentrated in places where the network is congested. Scotland is the obvious example, which is why one of our findings is about nothing else.
3. Buying low and selling high
The plain trade. Charge overnight or in the middle of a sunny day when there is more power than anyone wants, discharge into the evening when everyone gets home. In Great Britain this is usually the largest single line, and it is the one nobody publishes for any individual site.
That last point matters more than it sounds. You can look up what a specific battery was paid to stand ready and what it was paid to change output. You cannot look up what it traded. Anyone who tells you a specific site's trading income is estimating, including us, and we say so.
4. The capacity market
A separate payment for existing at all, so that the country has enough plant available on the worst winter evening. It is agreed years in advance, it is modest per megawatt, and it is the closest thing in this market to a bond coupon.
Why no two published numbers agree
Ask three sources what a battery earned and you will get three answers. Usually for one of these reasons.
- Some count all four lines, some count two. An index built only from units that participate in balancing quietly excludes every battery that does not, and there are a lot of those.
- Per megawatt of what. Per megawatt of power, or per megawatt hour of storage? A two hour battery and a one hour battery of the same power are different businesses.
- Gross or net. Money received, or money received less the cost of the electricity? The gap between those two is enormous, and both are misleading on their own.
- Whose year. Battery income swings hard with gas prices and with the weather. A figure with no window on it is not a figure.
What anyone can see, and what nobody can
| Question | Published? |
|---|---|
| What each battery was paid to stand ready | Yes, per unit, daily |
| What each battery was paid to change output | Yes, per unit, per half hour |
| What each battery is doing right now | Yes, within minutes |
| What each battery traded, and at what price | No. Not anywhere. |
| What each battery cost to build | No |
| Who actually owns it | Partly, and often through several layers |
The two live figures on our front page come from the first three rows. The estimate on our operating map for the fourth is a model, and the method page lists what is wrong with it.
Three things that surprise people
A battery is a load more often than it is a generator. Over a normal day the fleet spends more hours taking power in than giving it back, because it loses about 15 per cent in the round trip and has to buy more than it sells.
Being paid to stand ready can block the trade. A megawatt promised to a reserve auction cannot also be cycling. Most published trading estimates ignore this and count the same megawatt twice.
The owner is usually not the trader. The company that built the site often hands the decisions to a third party who decides what it sells and when. Both matter, and we hold both.