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Battery energy storage owners and operators face an increasingly complicated power market landscape. As more storage comes online, competition increases in comparatively shallow ancillary services markets. Maximizing asset value requires complex state-of-charge (SOC) management decisions and difficult choices of how and when to participate in ancillaries or energy across day-ahead and real-time markets. Choosing the right automated bid optimization software can often make the difference between profit and loss.
In a recent webinar, Dr. Gary Dorris, CEO of Ascend Analytics, joined Mike Huisenga, Managing Director of Business Development, and Jeff Hartsough, Managing Director of Asset Operations, to discuss ancillary saturation in energy markets, energy storage bid optimization strategies, and how Ascend's SmartBidder™ bid optimization software offers a robust, high-resolution solution for maximizing battery returns and minimizing risks.
Most US energy markets, and especially those in California and Texas, have reached or are reaching a point of ancillary saturation, in which batteries become economically indifferent between selling ancillary and energy products. Storage, a highly flexible quick ramping resource, can offer ancillary services at much lower prices across all ISOs, thereby undercutting inflexible legacy thermal units and saturating the market, as shown in Figure 1.
Ancillary demand is generally growing across ISOs. In ERCOT, for example, ancillary demand has increased from a 5 GW average in 2021 to 9 GW in recent months. However, storage deployment is growing faster. By 2030, ERCOT storage capacity is expected to exceed ancillary services market size by a 3:1 ratio, and ERCOT's real-time co-optimization + Battery (RTC+B) program will further saturate the market.
As storage becomes a price-setter in ancillary markets, ancillary service prices will reflect the opportunity cost to storage of not providing real-time (RT) energy arbitrage within a given time interval. Thus, prices will be highest during periods of high expected RT price volatility, and lowest during periods of low expected RT price volatility.
Ascend develops flexible and adaptive strategies that enable customers to respond to and exploit opportunities across different market states. Single strategy approaches like running Spin Only are no longer viable and operators who have recognized the inevitability of ancillary services saturation and are offering into the full suite of AS and energy products as a result.
SmartBidder proves critical on days of extreme volatility, in which up to 10% of an asset's annual revenue can be made in a single day. On these days, it becomes crucial to appropriately manage SOC in order to discharge during the highest revenue-producing hours.
For these high-volatility events, SmartBidder generates a base scenario for an optimal product mix across energy and ancillaries. SmartBidder re-solves the peak revenue hours using different product offer assumptions with the base case solution acting as an opportunity cost. This approach helps to hedge the inherent uncertainly of price forecasting to ensure all products are offered economically during the highest value periods. On just such a day on May 8, 2024, SmartBidder’s optimization strategies delivered twice the value of the ERCOT Houston Hub Index, as shown in Figure 2.
During 'typical' days, SmartBidder also proves extremely adept at creating value. Moderate days offer larger opportunities for DART optimization, as there is often an increased focus on DA and RT energy during key hours. As with high-volatility days, SmartBidder helps asset owners and operators manage SOC and thus maximize value.
Ascend's bid optimization software also allows customers to create, validate and deploy custom strategies for market states that map to organizational risk policies.
SmartBidder uniquely offers a unified platform for custom bid optimization combined with scheduling services to manage asset performance and operations for storage, renewable, and hybrid assets. The solution enables users to develop their own customized bid strategies based on nodal specific forecasts, asset specific constraints, and risk-based optimization for day-ahead and real-time bids.
Access the full webinar now or contact us if would like to learn more.
Battery energy storage owners and operators face an increasingly complicated power market landscape. As more storage comes online, competition increases in comparatively shallow ancillary services markets. Maximizing asset value requires complex state-of-charge (SOC) management decisions and difficult choices of how and when to participate in ancillaries or energy across day-ahead and real-time markets. Choosing the right automated bid optimization software can often make the difference between profit and loss.
In a recent webinar, Dr. Gary Dorris, CEO of Ascend Analytics, joined Mike Huisenga, Managing Director of Business Development, and Jeff Hartsough, Managing Director of Asset Operations, to discuss ancillary saturation in energy markets, energy storage bid optimization strategies, and how Ascend's SmartBidder™ bid optimization software offers a robust, high-resolution solution for maximizing battery returns and minimizing risks.
Most US energy markets, and especially those in California and Texas, have reached or are reaching a point of ancillary saturation, in which batteries become economically indifferent between selling ancillary and energy products. Storage, a highly flexible quick ramping resource, can offer ancillary services at much lower prices across all ISOs, thereby undercutting inflexible legacy thermal units and saturating the market, as shown in Figure 1.
Ancillary demand is generally growing across ISOs. In ERCOT, for example, ancillary demand has increased from a 5 GW average in 2021 to 9 GW in recent months. However, storage deployment is growing faster. By 2030, ERCOT storage capacity is expected to exceed ancillary services market size by a 3:1 ratio, and ERCOT's real-time co-optimization + Battery (RTC+B) program will further saturate the market.
As storage becomes a price-setter in ancillary markets, ancillary service prices will reflect the opportunity cost to storage of not providing real-time (RT) energy arbitrage within a given time interval. Thus, prices will be highest during periods of high expected RT price volatility, and lowest during periods of low expected RT price volatility.
Ascend develops flexible and adaptive strategies that enable customers to respond to and exploit opportunities across different market states. Single strategy approaches like running Spin Only are no longer viable and operators who have recognized the inevitability of ancillary services saturation and are offering into the full suite of AS and energy products as a result.
SmartBidder proves critical on days of extreme volatility, in which up to 10% of an asset's annual revenue can be made in a single day. On these days, it becomes crucial to appropriately manage SOC in order to discharge during the highest revenue-producing hours.
For these high-volatility events, SmartBidder generates a base scenario for an optimal product mix across energy and ancillaries. SmartBidder re-solves the peak revenue hours using different product offer assumptions with the base case solution acting as an opportunity cost. This approach helps to hedge the inherent uncertainly of price forecasting to ensure all products are offered economically during the highest value periods. On just such a day on May 8, 2024, SmartBidder’s optimization strategies delivered twice the value of the ERCOT Houston Hub Index, as shown in Figure 2.
During 'typical' days, SmartBidder also proves extremely adept at creating value. Moderate days offer larger opportunities for DART optimization, as there is often an increased focus on DA and RT energy during key hours. As with high-volatility days, SmartBidder helps asset owners and operators manage SOC and thus maximize value.
Ascend's bid optimization software also allows customers to create, validate and deploy custom strategies for market states that map to organizational risk policies.
SmartBidder uniquely offers a unified platform for custom bid optimization combined with scheduling services to manage asset performance and operations for storage, renewable, and hybrid assets. The solution enables users to develop their own customized bid strategies based on nodal specific forecasts, asset specific constraints, and risk-based optimization for day-ahead and real-time bids.
Access the full webinar now or contact us if would like to learn more.
Ascend Analytics is the leading provider of market intelligence and analytics solutions for the energy transition. The company’s offerings enable decision makers in power development and supply procurement to maximize the value of planning, operating, and managing risk for renewable, storage, and other assets. From real-time to 30-year horizons, their forecasts and insights are at the foundation of over $50 billion in project financing assessments. Ascend provides energy market stakeholders with the clarity and confidence to successfully navigate the rapidly shifting energy landscape.
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