Price spreads are widely used to gauge the potential for batteries, and they’ve been on the rise in the NEM. But how much of that price spread are batteries really capturing?
We calculated the “captured spread” for several NEM batteries, defined as the daily difference between the weighted average of discharge price and the weighted average of charge price. The graphs below illustrate our findings for 2024.
We compared the captured spread with the theoretical spread commonly used in various analyses. For each battery, we measured its operational duration and benchmarked it against the equivalent intraday price spread based on market prices. Results show some interesting patterns.
Notably, batteries sometimes capture a greater spread in months when the theoretical price spread is lower. This occurs because price spread overlooks the critical role of price volatility, which can dramatically impact battery performance and revenue capture.
Furthermore, battery optimisation and bidding strategies vary widely between assets. Even under similar market conditions, these differences can lead to significant variations in captured spread.
Ultimately, a more comprehensive method that incorporates price volatility and bidding system capabilities is essential to truly understand the market potential for batteries. As market dynamics shift, optimising bidding strategies will be key to enhancing battery profitability and staying ahead in the evolving energy landscape.
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