Utilities have a “slightly different logic” in trading BESS than optimizers when it comes to composition and internal synergies, Octopus Energy said after a recent deal to manage a large BESS portfolio.
Octopus Energy has signed a two-year, fixed-price toll agreement with the Gresham House Energy Storage Fund, as the latter announced on June 5.
Dispatch and control for the 568MW battery energy storage system (BESS) assets will be managed using the proprietary Kraken platform. The company’s in-house trading team will handle energy trading.
Speak with Energy storage.news Speaking about the deal, Kieron Stopforth, head of flexibility at Octopus Energy, explained that the management of the BESS is “a highly integrated and relationship-driven system”.
BESS’s market activity could change under Octopus’ management.
“Our job is to try to get the most value out of these batteries and assets and to do that, stop fulfilling the flexibility function, reduce system costs and reduce curtailments. Within that specific strategy and the specific markets, we are quite indifferent to which markets we bid on. We try to maximize value for the projects,” said Stopforth.
A large part of BESS’s income comes from participation in National Grid ESO’s support services. Energy trading and the Balancing Mechanism (BM) also generate income; lately, BM revenues have overtaken energy trading.
Stopforth said: “What we have seen recently is a value shift towards more wholesale applications. For example, the BM sent a little more. In terms of individual revenue streams, we have a fairly flexible strategy.”
When asked whether utilities have an advantage over third-party optimizers when it comes to the more energy trading intensive activities such as the BM, Stopforth said: “The key difference for utilities is that they have a retail book and they trade and hedge on that. Batteries can be useful and can play a role in addressing some of the risks there.
“Everyone is trying to do the right thing and maximize value. What that looks like in practice may not be all that different. But the composition and the internal synergies, that logic is slightly different for utilities.”
The full interview is available with premium access at Energy-Storage.news.
