Battery operator Gresham House hit by delays in new Balancing Market software

Gresham House Energy Storage Fund (GRID), which operates 640MW/738MWh of battery storage, has complained of delays in new software that would allow system operator NGESO to call on batteries in preference to fossil plants. GRID said that delay had exacerbated uncertainties in the market that meant its revenues were below budget.
GRID said NGESO had not completed the modernisation of its control room and associated processes in time to be able to make effective use of batteries in the Balancing Mechanism (BM), “despite the successful trials demonstrating their potential back in 2020”. Instead, it said, “despite being cheaper and lower-carbon assets, batteries are consistently skipped over in favour of assets such as fossil fuel gas plants”. That affected all GB batteries, which “are earning less revenue than they should from the BM at this time”.
The company said it expected revenues to recover in future because NGESO had publicly committed to resolving the issues and because there will be new tools, including the planned December launch of a new trading platform and optimisation tool, which GRID said would see NGESO use batteries much more effectively.
GRID said the software delay had been against a backdrop of below-budget revenues in 2023, compared with above-budget revenues in the two previous years. That was due to higher power prices and hence reduced demand, as well as more supply availability as renewable deployment continues and older power stations remain in operation.
Ben Guest, Fund Manager of Gresham House Energy Storage Fund plc & Managing Director of Gresham House New Energy, said: “The fundamental drivers for battery storage continue to be strong, with growth in BESS capacity continuing to lag the pace of renewables growth. At 2.7GW, more UK wind and solar was added during the first quarter of 2023 than the existing size of the entire battery energy storage sector. Delays at NG ESO in launching the necessary tools for the control room is impacting revenues today. However, we are confident that NG ESO will have taken the important steps to resolve this in the coming months.”
GRID said that short-term strategy shift would help manage delays in connecting new capacity to the network. It said that instead of growing the GB portfolio faster in MW terms in the near term, it will add c350MWh by extending the battery duration to up to 2 hours on up to 375MW of existing projects. “This has the benefit of being a quicker route to revenues as the projects being extended are already prepared for extensions, don’t require new grid connections and require less additional capital”.