Big batteries cash in as they charge past gas to become second biggest player in evening peaks
Big batteries have become the second biggest player in the setting of prices in evening peaks - a mechanism that ultimately sets the wholesale prices inflicted on customers.
According to the latest quarterly survey from the AEMO, big batteries have already captured up to 22% of the price setting market in the evening peaks.
That means big batteries have overtaken gas and coal, and are trailing only hydro, in their influence over evening wholesale prices.
However, unlike the FCAS market where big batteries undercut gas to lower prices, the big batteries now being deployed are bidding at much higher prices in those peaks than other sources.
For the December quarter, big batteries set the price at an average of $309/MWh, compared to the average $189/MWh from gas, and $111/MWh from hydro.
That high price mostly reflects the fact that battery storage is being bid into the market in the demand peaks, where prices are high.
But it also reflects the fact that more and more battery storage facilities are now owned, or at least operated, by the big players in the market.
Estimated net revenue for NEM grid-scale batteries reached $69.5 million in the December quarter, more than doubling the estimate for the same period in 2023.
AEMO noted that battery storage was capturing more value (high prices) during the peak pricing events in the northern regions - the coal-dependent states of NSW and Queensland.
That’s likely because the inflexibility and unreliability of coal – whose output actually fell in the peak periods, particularly in Queensland – offers more opportunities for the market to bid prices higher.
Average prices in NSW and Queensland were more than double that of Victoria and South Australia, which have significantly higher shares of wind and solar generation.
Volatility in the coal states was largely responsible for a big boost in net revenue for pumped hydro projects, which jumped nearly three-fold to $83.3 million in the quarter.