What Happens When Every Battery Market Gets Crowded? - Centrica Energy

Ed Porter (0:00)

I'm your host, Ed Porter. Welcome back to Transmission. Transmission Transmission Originally, ancillary services were the key to battery trading. They saturated. Then it was re-trading. That's saturating too. This conversation is all about how trading teams stay on top of the opportunity.

Brecht is the director of physical asset trading and optimization at Centrica Energy, one of Europe's largest trading houses, across a 20 gigawatt portfolio. This episode talks through the mechanics, why fixing issues fast matters more than chasing the perfect trade, where AI actually earns its place in the loop, and how regulation can take value off the table. If you want to know more about how things like grid restrictions are changing your battery revenue forecast today, ask Ko, Modo Energy's AI analyst. Sign up is free, link in the bio. Let's jump in.

Brecht, welcome to Transmission.

Brecht Dierckx (1:01)

It's great to be here. Thanks for the invitation.

Ed Porter (1:03)

Our pleasure. And as always, let's get straight into it. So what is the one thing that people get wrong about optimizing batteries?

Brecht Dierckx (1:09)

I think the market as a whole has learned a lot. There's a lot more research out there, a lot more depth to research. So I think we have a lot of very educated conversations with our customers about what it takes to optimize a battery. The one thing that people do tend to underestimate in the beginning is the importance of operational excellence. Detecting when something goes wrong with a battery, analyzing what the root causes it and fixing it and doing that as quickly, as efficiently as possible.

That costs quite a bit of money for people if they don't have that under the belt right away. So I think that's something people should definitely pay attention to.

Ed Porter (1:46)

That's pretty funny, right? Because people would naturally assume that the way to get the most money out of a battery is like the most sort of complicated, multivariant optimization of the sort of minutiae of sort of intraday power and all the various power options out there. But you're saying actually one of the things that probably goes wrong more than anything else is, can you get the thing fixed on site quickly and back up and running? That's going to cost you the most money.

Brecht Dierckx (2:11)

Yeah, it's not just about playing offense, it's also about playing defense.

Ed Porter (2:15)

Yeah, I love that. I love that. Okay. And so you've argued before that, and you can tell we've done our homework on Transmission, that what you're seeing is that there is converging performance around modeling returns. And the conversation that we're seeing in European trading markets is going from, can batteries make money? We're starting to see the answer is yes.

But it's, can you, as an optimizer, can you make it repeatedly?

Brecht Dierckx (2:44)

Absolutely. I think, you know, if you go back a couple of years ago, when we got started, it was 2017, 2018 People didn't really know what to make of a battery. It was hard to convince people that it was worthwhile to invest in a battery. And, you know, we've seen some spectacular returns for these initial investors. That money is no longer there, right? You see a lot more, you know, these early returns, these early spreads that you could capture, they're going down because there's more batteries in the market.

So, our platform, quite proud of what we built, still think it's possible if you have like a small group of people, smart ones, with a bit of seed capital, you can get similar performance as we do. But the trick now is being able to do that repeatedly. So doing it again and again and again, across different markets, across your entire portfolio, all at the same time. And I think that you can't do that just by keep throwing capital at it to find new things. That has to come from your returns. And even so, if those stellar returns are gone, you need to be able to still, in a market that has smaller margins, still to make money, and then reinvest those into doing better.

Ed Porter (3:56)

So what's the secret source, right? Because as you say, people come along, they look at the market. There's some very good returns initially. And then the market starts to saturate. More batteries get added and returns drop. So yeah, what's the secret source to kind of staying at the cutting edge of that?

Brecht Dierckx (4:12)

You know, the market, it has evolved a lot already, but it's still very much a moving target that we're chasing. Serial services may be not so important as before. Now people are talking about, you know, re-trading and wholesale markets and continuing to the today market.