DC battery price signal remains strong
The chart shows that the Dynamic Containment service introduced in the UK in Oct 2020 is still sending a strong price signal to UK battery investors. Prices continue to clear at the unofficial cap near 17 £/MW/h, the equivalent of 150 £/kW/year in annualised revenue terms. With such a strong price incentive, volume bidding into the DC auctions is gradually creeping up & is now around 400MW. But that is well short of the Grid guidelines for DC demand across 2021 which range between 1.1 – 1.4 GW. The ‘DC party’ won’t last forever, given increasing competition as battery volumes rise across the next few years. But for now, the market is structurally short capacity and that is good news for battery returns.