Utilities have a ‘slightly different logic’ on trading BESS than optimisation firms when it comes to composition and internal synergies, Octopus Energy said after a recent deal to manage a large BESS portfolio.

Octopus Energy signed a two-year fixed-price tolling agreement with Gresham House Energy Storage Fund, as the latter announced on 5 June.

Dispatch and controls for the 568MW battery energy storage system (BESS) assets will be managed with its proprietary Kraken platform. The company’s in-house trading team will handle the energy trading side.

Speaking to Energy-Storage.news about the deal, Octopus Energy’s head of flexibility, Kieron Stopforth, explained that the BESS’ management is “a very integrated and relationship-driven system”.

BESS’ market activity could change under Octopus’ management.

“It’s our job to try and get the most value from these batteries and assets and, to that, end fulfilling the flexibility function, reducing system costs and reducing curtailment. Within that specific strategy and the specific markets, we are fairly indifferent to which markets we bid into. We are trying to maximise value for the projects,” Stopforth said.

Much of BESS’s revenue comes from participation in National Grid ESO’s ancillary services. Energy trading and the Balancing Mechanism (BM) also generate revenue—recently, BM income has overtaken energy trading.

Stopforth said: “What we’ve seen recently is a shift in value to more wholesale applications. The BM has dispatched a bit more, for example. In terms of individual revenue streams, we have quite a flexible strategy.”

Asked about whether utilities have an advantage over third-party optimisation firms when it comes to the more energy trading-intensive activities like the BM, Stopforth said: “The key difference for utilities is having a retail book and trading and hedging on that. Batteries can be helpful and can play a role helping some of the risks there.

“Everyone is trying to do the right thing and maximise value. How that looks in practice might not be that different. But the composition and internal synergies, that logic is slightly different for utilities.”

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