This week, as some children return to school, I reflected on the value of making choices and changing your mind. The school that my daughter attends made my choice really difficult by asking me to decide whether she should go back weeks ago and stipulating that I must not change my mind. This made me think about batteries and short term optimisation …..bear with me….. as when EDF are optimising their hundreds of MWs of batteries against cashout price the exact same factors impact our ability to make money.
Being able to decide as late as possible: When we think about the balance of the grid, system direction outturns either long (excess generation) or short (excess demand). Uncertainty in demand forecasts, renewables generation and reliability of dispatchable generation mean that we are never 100% confident of system direction until after the event. However our confidence in correctly adjusting for demand forecast errors rises dramatically as we approach delivery, the time at risk reduces on dispatchable plant AND the renewables forecasting persistence models just get stronger. So having to lock in your decision well in advance destroys your ability to capture value. At EDF we re-optimise our batteries in real time even during the delivering half hour.
Changing your mind:- Forecasts are not always 100% reliable. If we take HH16 (0730 to 0800) yesterday morning (Tuesday 9th June). All indications were that it would be undersupplied, even the spot market priced this in . Once we entered the delivery period demand was well below forecast and failed to ramp up as expected. The system suddenly looked long. It’s at these times you want to quickly cancel your battery discharges or even schedule it to top up the state of charge (as price will be much lower) and save your discharge for a better opportunity. At EDF our algorithms are continuously taking into account new market information so that when needed we can change our minds on the battery dispatch – sometimes creating value and sometimes protecting existing P&L.
EDF, as the leading optimiser of flexible generation in the UK, offer full market access for owners/developers with enhanced services such as price floors (remember with a floor you retain the upwards benefits but reduce the downside risk – it’s not a fixed price deal) that many others cannot offer.