Battery revenues have quadrupled since December 2024, according to recent analysis by Cornwall Insight, largely because of much higher revenues from grid stabilising reserve services.
Such services were just 4% of revenues at the start of December 2024. But Cornwall says the increase in revenues occurred after the National Energy System Operator (NESO) introduced a new product, ‘Quick Reserve’, in November 2024. This frequency management tool is intended to counter supply-demand imbalances. Cornwall Insight said, “Quick Reserve ensures stability by getting batteries to rapidly ramp up (positive) or down (negative) energy use within one minute. This capability makes batteries indispensable for providing both positive and negative energy services, unlike other renewables that can only offer negative energy services, lacking the speed required for positive Quick Reserve.” It said tight system margins were also a partial factor in the increased revenues.
There has been a relatively narrow range of technologies bidding into Quick Reserve so far, with batteries dominating, and accounting for all accepted volumes during December 2024.
The compoany said Quick Reserve revenue level may not continue, because another 6GW of batteries are due to come online by the end of 2025 and market saturation could dampen revenues.
Dr Matthew Chadwick, Lead Research Analyst at Cornwall Insight, said: “The rapid rise of battery storage revenues from Quick Reserve highlights how critical flexibility services are becoming in the UK’s evolving energy system. Ultimately, getting to net zero will involve more intermittent energy generation coming on to the grid, and that is where batteries will thrive. Other technologies simply do not have the ability to ramp up production that quickly – Quick Reserve is a batteries market.
“Of course, as with any revenue stream, the more competition there is, the less the returns. With another 6GW of batteries due to come onto the system this year – and more to follow – we could see revenues for Quick Reserve fall, as returns on other frequency response services have done.”