This summer’s skies were a bit more grey than usual across central and western Europe – and the gloom extended to BESS revenues. With fewer sunny hours, solar output fell and volatility eased in wholesale power markets. Germany illustrates the dynamic: solar generation dropped to 9 TWh in July from 10.5 TWh in June; it rebounded in August but remained below 10 TWh. Negative-price hours moved accordingly: from an all-time high of 141 in June to just 12 in July and 64 in August. The pattern was broad-based: France and the Netherlands followed a similar trajectory. Great Britain saw just one negative-price hour in July.
Consequently, wholesale spreads declined markedly and accounted for the bulk of the revenue decrease. In Germany, the average arbitrage opportunity for a 2-hour battery on the day-ahead market fell from 274 EUR/MWh in July-August 2024 to 236 EUR/MWh over the same period this year – a 14% drop. The decline was even more pronounced on the intraday market, with the average arbitrage opportunity falling by 35%. BESS in the GB market faced a similar dip in revenues from wholesale trading.
Ancillary services did not fully offset the margin squeeze. Because FCR and aFRR capacity prices are influenced by the opportunity costs of flexible assets, they tended to soften alongside weaker day-ahead/intraday spreads. In response, BESS operators bid more aggressively into FCR and aFRR capacity auctions to secure awards and stabilize cashflows – effectively putting a floor under revenues while energy arbitrage underperformed. Ancillary services continued to account for the majority of overall revenues in Germany this summer, with a share of more than 57%.
As a result, Europe’s two most advanced markets – Germany and GB – saw overall merchant revenues fall. Pexapark’s BESS Valuation tool shows that 2-hour battery revenues in Germany fell by a quarter, from EUR 20.2k/MW in June to EUR 15.2k/MW in July, and notched a minor increase to EUR 15.4k/MW in August. Overall, revenues were EUR 9k/MW lower compared to summer 2024.
July saw the lowest revenues since the start of the year for BESS in GB due to suppressed spreads and saturation across the dynamic frequency response product suite. However, BESS benefited from a high acceptance rate on the Balancing Mechanism, especially during periods of high wind output in Scotland. Quick Reserve availability payments also provided support.
Bearish revenues were not the rule everywhere, though. Spain bucked the trend of lower revenues: record solar generation resulted in higher volatility, with the average daily spread surging by 35% from last summer and exceeding EUR 200/MWh. Poland’s PICASSO integration resulted in sky-high aFRR energy activation prices.
A cloudy summer for BESS does not mean that it will always be gray. September has already seen improved revenues across markets. In both Germany and GB, overall merchant revenues are still expected to comfortably exceed 2024 levels. Countries are expanding the revenue stack, as exhibited by Germany’s plans to introduce an inertia market, Greece’s move to open up balancing markets to BESS, and Spain’s new voltage control rules. All in all, revenue opportunities for BESS remain robust.
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