We have been reporting on ancillary market saturation by batteries in different forms since 2019. Early on, we visualized the battery fleet as a Pac-Man figure, eating its way sequentially through the smallest available markets until it drives all of the prices down to the DAM energy arbitrage opportunity (see our 2020 webinar “The Next Technology” and our follow up article “Checking in on Pac-Man” the following year). More recently, we have refined our preferred visualization for market convergence into the 12-month rolling average of arbitrage and energy-balanced regulation revenue (see “Energy-Balanced Regulation” article for more details on this metric). We’ve seen ancillary opportunities decline gradually over the last 5 years, relative to energy arbitrage. In this article, we will focus on where the bottom might be for ancillaries, and what this might mean for batteries interested in selling ancillaries.

We tend to focus on SP15 when measuring convergence, since that’s where most of the current and planned batteries in CAISO reside.

Figure 1 - SP15 BESS Revenue opportunities (12-month rolling average, excludes scarcity events)