Are batteries the new solar panel?

1. The shape solar leaves

In summer, solar generates hardest in the middle of the day, when demand is lowest and the price is weakest.

On a clear summer day a solar fleet produces most of its output between roughly ten in the morning and four in the afternoon, while demand runs the other way, drawing least in the middle of the day and most in the early evening, so the two curves pull apart and leave a midday surplus that has to clear somewhere. It clears on the wholesale market at the worst possible time: over the second quarter of 2025, after the sunniest spring on record, daytime power prices in Britain fell below overnight prices for the first time ever,¹ and at the extreme the price turns negative, so a generator ends up paying to export.²

For a supplier I read this as a margin problem before a climate one, because the solar it has contracted to buy arrives in a glut while the day-ahead price is on the floor, so any sell-back lands at that floor and the revenue per megawatt-hour on midday solar is thin or even negative, all while the same households are bought expensive power again at the evening peak. The chart below is that summer day, with generation overshooting demand from late morning and then collapsing away as the peak arrives.

2. What a battery does with it

It moves the midday surplus into the evening, for the cost of a small round-trip loss.

A battery sits between that surplus and that peak, charging through the cheap midday and overnight hours, holding the energy, and discharging it back into the dear evening, and because a modern pack returns roughly 85 to 92% of what it takes in, the loss on the round trip is the only real cost of the trade, leaving it to earn the gap between the price it charged at and the price it later displaced. The animation below is that single day, with the battery filling through the cheap troughs and emptying into the evening peak in one clean cycle, its state of charge simply the running total of those moves.

3. What it saves a supplier

The saving is the spread it removes, between the cheap charge and the dear peak it avoids.

A supplier buys its power in two layers, locking most of it a day ahead and then settling each half-hour after the fact at the imbalance price for being short or long, and those prices stack up in both cost and volatility: on 9 December 2024 baseload wholesale sat near £93/MWh while the day-ahead peak ran to about £142, roughly 53% above it, with volatile imbalance on top, and by March 2025 that imbalance averaged £63/MWh when the system was long but £120 when it was short, spiking to £207 in individual half-hours.³ Because households burn most of their power in exactly those dear peak half-hours, a supplier's demand-weighted cost ends up sitting above the flat baseload it hedged, and a battery closes that gap by charging near the floor and discharging into the peak and the imbalance highs.

That value is far from even across the year, running largest on peak-weighted winter evenings and high-volatility days when a short system pushes imbalance into the £120 to £200/MWh range, and compressing on flat, windy days when the spread closes up. The playbook itself is plain enough: charge in the cheapest overnight and midday-solar half-hours and discharge into the evening peak and the short-system imbalance periods, so the supplier covers its own forecast error from storage rather than cashing out, and stacks day-ahead arbitrage on top of Balancing Mechanism dispatch, where GB batteries priced their energy around 20 to 25% below gas plants across 2024 to 2025.⁵

Take the day-ahead peak-to-trough spread a two-hour GB battery could actually capture, which ran from under £40/MWh in February 2024 to about £70 that August,⁶ and even after netting it down by round-trip efficiency a saving in the mid-tens of pounds per megawatt-hour survives, before imbalance avoidance and stacked Balancing Mechanism value lift the whole asset to a benchmark near £50k/MW/year in 2024 and about £73k over the twelve months to April 2026.⁵ The mechanics get sharper still on a genuinely volatile day, because when the peak hits £138/MWh while the off-peak falls to negative £33/MWh you are paid to charge and then paid again to discharge, worth roughly £174/MWh on the energy shifted even after a 90% round trip.

4. Who runs the battery, and how it bills

Flexibility only works inside a settlement framework that lets it pay.

That framework has been forming one Elexon modification at a time, and it is the part of the story I find most underrated, because few households will ever trade a battery themselves and most will instead sit inside an aggregator's fleet or a supplier's. Since modification P344, "Wider Access", went live in December 2019, independent aggregators have been able to bid flexibility from batteries, EV chargers and heat pumps straight into the Balancing Mechanism, running as small Virtual Lead Parties that separate the sale of flexibility from the supply of energy, without holding a supplier licence or owning the customer's contract.⁷

Two later reforms then matter most for a home battery specifically, the first being P375, which lets a unit settle on a meter at the asset itself rather than at the property boundary, so its actions can be measured and paid even where the house has not yet moved to half-hourly settlement,⁸ and the second being P444, which compensates the supplier for the energy an aggregator moves on its customers, priced on Ofgem's cap methodology, so it is no longer left short when a third party flexes its own demand.⁹

Underneath all of it sits market-wide half-hourly settlement, which from late 2025 begins settling every meter by the half-hour and scales toward full coverage in 2027,¹⁰ and once a supplier can see consumption at that granularity across its whole book it can finally price flexibility, reward it, and dispatch a fleet of home batteries as a single asset, which is the point at which thousands of small batteries quietly become a power station it can actually use.

So, are batteries the new solar panel? Solar still earns its place on the roof, but the money and the market design have both moved toward flexibility, and a battery is how a household or a supplier captures it, which is why, given the choice, I would rather own the asset that shifts the power through the day than the one that only makes more of it at noon.

Notes & sources

1. UK daytime power prices fell below overnight prices for the first time on record in Q2 2025, after a record-sunny spring lifted solar output. Drax Electric Insights, Q2 2025. ↩
2. On the duck curve and negative prices: abundant midday solar drives a midday price trough, and at extremes the wholesale price turns negative, so generators pay to export. Duck curve, overview. ↩
3. Baseload, day-ahead and imbalance levels for 9 December 2024 and March 2025 are from Elexon settlement and day-ahead data, summarised in a live energy dashboard I run. System (imbalance) prices are published by Elexon. ↩
4. The day-ahead and imbalance series and the 20:30 example come from the same dashboard, on Elexon system prices and day-ahead (APX) wholesale data. The chart shape is illustrative; the annotated point and levels are from that data. ↩
5. In 2024 to 2025 GB batteries priced Balancing Mechanism energy Offers around £105/MWh, roughly 20 to 25% below equivalent gas (CCGT) Offers; two-hour BESS revenues benchmarked near £50k/MW/year in 2024 and about £73k/MW/year over the twelve months to April 2026. Modo Energy, GB BESS benchmarks. ↩
6. The day-ahead peak-to-trough spread a two-hour GB battery could capture ran from under £40/MWh (Feb 2024) to about £70/MWh (Aug 2024). Timera Energy. ↩
7. BSC Modification P344, "Wider Access and Project TERRE", live from December 2019, opened the Balancing Mechanism to independent aggregators as Virtual Lead Parties, separating the sale of flexibility from the supply of energy. Elexon, Wider Access (P344). ↩
8. BSC Modification P375 enables settlement using a meter at the asset, not only at the property boundary, opening behind-the-meter flexibility such as home batteries. Elexon, on asset metering and local flexibility. ↩
9. BSC Modification P444 introduces compensation to suppliers for volumes adjusted by independent aggregators, calculated on Ofgem's price-cap methodology. Elexon, P444 supplier compensation. ↩
10. Market-wide Half-Hourly Settlement moves every meter to half-hourly settlement, with customer migration beginning in late 2025 and full rollout toward 2027, letting suppliers price and reward flexibility. Elexon, Market-wide Half-Hourly Settlement. ↩

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