The role of the Optimiser in GB with Chris McLeod (Head of trading @ Habitat Energy)
Aug 30, 2023
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Chris McLeod, Head of Trading at Habitat Energy, discusses the main markets for batteries, the decision-making process for entering markets, and the changes in the energy market. They also talk about the role of optimizers, the volatility of electricity prices, and Habitat Energy's plans for expansion.
The decision-making process in determining which markets to operate in is crucial for optimizing the earnings potential of battery assets.
The battery storage market is evolving, with new product types and the potential for stacking services across multiple markets for increased revenue.
Deep dives
Maximizing earnings potential and market decisions
As an optimizer, the main goal is to maximize the earnings potential of managed assets, but this can vary depending on the market and time horizon. With the flexibility of battery storage, the decision-making process becomes crucial in determining which markets to operate in. While non-BM strategies can be risky due to dealing with the last available market, often the market of last resort, day-to-day decision making of a storage operator plays a significant role. Understanding new markets, trading further out on the curve, and improved liquidity leads to more complex optimization decisions.
The role of the optimizer in the GB market
The podcast features Chris McLeod, the head of trading at Habitat Energy, discussing the role of the optimizer in the GB market. Chris highlights the seismic shift from a large thermal portfolio of gas power stations to a battery storage portfolio. Habitat Energy started with a pilot software program, gradually building up its trading capability. Currently, their operational portfolio consists of diverse assets, including old and new sites with varying durations. With a focus on maximizing earnings potential, the optimization process involves using comprehensive forecasts and blending machine learning models with fundamental models.
Different markets for batteries
Chris provides an overview of the different markets in which batteries can participate. Response markets, energy trading, reserve markets, and stability markets are some of the options. He explains that response markets help control system frequency, while reserve markets offer discharging flexibility over a longer period. Stability markets focus on locational contracts where the grid faces constraints. Although response markets and energy trading currently dominate battery revenues, the market is expected to evolve, with new product types and the potential for stacking services across multiple markets.
Challenges and future prospects for Habitat Energy
Chris discusses the challenges and future prospects for Habitat Energy. As the company operates in three distinct geographies, including the UK, Australia, and ERCOT, they are well-positioned for market reforms and changes in the industry. Chris reflects on the importance of managing warranties, operational complexities, and constantly adapting to market changes. He also acknowledges the potential growth of traded products over shorter timeframes, the need for liquidity providers, and the increasing complexity of optimization decisions with multiple markets and stacking opportunities.
After building an asset and connecting it to the grid - the next step is to enter the markets in order to earn revenue. Optimising the actions of a battery asset is vital in order to make an asset profitable. An pptimiser is there to get the most out of a battery. In today's episode, guest host Robyn Lucas is in the studio with Chris McLeod - Head of Trading at Habitat Energy. Over the course of the conversation they discuss:
An overview of the main markets in which batteries commonly participate in.
How to decide what markets to enter an asset in when?
The rationale for choosing between whether to enter into the Balancing Mechanism or not.
How the markets have changed over the last 10 years.
What success might look like in the future for batteries.
About our guest
Operating across UK, USA and Australia, Habitat Energy’s mission is to get the best possible return on your investment, whether that’s a single battery, co-located renewable generation or a whole portfolio of assets across multiple locations.
To find out more about what they do - head to their site.
About Modo
Modo Energy is the all-in-one platform for battery energy storage analysts.Through an integrated mix of price forecasts, revenue benchmarking, in-depth research, real-time market screens, and downloadable data - you can finance, build, and operate the energy system of the future. Modo’s paid plans serve more than 80% of battery storage owners and operators in Great Britain.
To keep up with all of our latest updates, research, analysis, videos, podcasts, data visualization, live events, and more, follow us on LinkedIn.
If you want to peek behind the curtain for a glimpse of our day-to-day life in the Modo office(s), check us out on Instagram.
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