Key Takeaways
- • EPEX SPOT launches TBx Index suite to benchmark battery and energy storage asset valuations in European wholesale power markets, with TB2 and TB4 indices measuring daily price spreads between peak and low periods.
- • Index methodology captures storage economics: TB2 calculates spreads using the eight highest and eight lowest 15-minute pricing periods; TB4 uses 16 highest and 16 lowest periods—reflecting the theoretical revenue available to batteries that charge cheap and discharge expensive.
- • Addresses market infrastructure gap: Storage-linked pricing structures exist in bilateral deals but lack an independent, widely-accepted reference benchmark; EPEX SPOT positions TBx as the standard for organized markets, OTC trading, and bilateral contracts.
- • Timely for rapid European battery deployment: Launch aligns with accelerating battery capacity growth and increased role of flexible assets in balancing grids with higher wind and solar penetration.
- • Indices include negative and extreme prices to reflect full volatility range in European power markets, making benchmarks relevant to storage operators, traders, investors, and project valuers.
Summary
EPEX SPOT, the European power exchange, has launched the TBx Index suite effective immediately, introducing a new benchmark framework for measuring battery and energy storage asset valuations in wholesale electricity markets. The suite debuts with two indices—TB2 and TB4—both designed to quantify the daily spread between the cheapest and most expensive electricity pricing periods, thereby showing theoretical revenue potential for storage assets.
The indices employ a straightforward but effective methodology. TB2 calculates the difference between the average price of the eight highest-priced 15-minute periods and the average of the eight lowest-priced 15-minute periods within a single trading day. TB4 extends this approach by using the 16 highest and 16 lowest-priced periods. In practical terms, these benchmarks measure the arbitrage opportunity available to a battery that charges when electricity prices are depressed and discharges during peak-price hours—a core economic model for battery storage operations across Europe.
The launch addresses a documented gap in market infrastructure. While storage-linked pricing arrangements already exist in private and bilateral contracts, the market has lacked a universally recognized, independent reference standard. EPEX SPOT intends the TBx suite to serve multiple functions: as a benchmark for organized markets and OTC trading, as a reference in bilateral contract negotiations, and as a standardized valuation tool for energy storage project assessment. The indices incorporate negative and extreme prices, ensuring they capture the full range of volatility increasingly evident in European power systems.
Lukas Gresnigt, CEO of EPEX SPOT, characterized the launch as setting "a new standard for flexibility valuation" and positioning the exchange "as the reference provider for storage-linked price benchmarks in European wholesale markets." This positioning reflects the strategic importance of storage assets as European electricity systems integrate rising shares of renewable generation. Battery capacity deployment across Europe has accelerated significantly, and flexible assets are now critical for balancing grids with higher wind and solar penetration. A standardized, transparent benchmark for storage value capture supports investor confidence, enables accurate project financing, and facilitates the efficient allocation of capital to storage infrastructure.
The indices employ a straightforward but effective methodology. TB2 calculates the difference between the average price of the eight highest-priced 15-minute periods and the average of the eight lowest-priced 15-minute periods within a single trading day. TB4 extends this approach by using the 16 highest and 16 lowest-priced periods. In practical terms, these benchmarks measure the arbitrage opportunity available to a battery that charges when electricity prices are depressed and discharges during peak-price hours—a core economic model for battery storage operations across Europe.
The launch addresses a documented gap in market infrastructure. While storage-linked pricing arrangements already exist in private and bilateral contracts, the market has lacked a universally recognized, independent reference standard. EPEX SPOT intends the TBx suite to serve multiple functions: as a benchmark for organized markets and OTC trading, as a reference in bilateral contract negotiations, and as a standardized valuation tool for energy storage project assessment. The indices incorporate negative and extreme prices, ensuring they capture the full range of volatility increasingly evident in European power systems.
Lukas Gresnigt, CEO of EPEX SPOT, characterized the launch as setting "a new standard for flexibility valuation" and positioning the exchange "as the reference provider for storage-linked price benchmarks in European wholesale markets." This positioning reflects the strategic importance of storage assets as European electricity systems integrate rising shares of renewable generation. Battery capacity deployment across Europe has accelerated significantly, and flexible assets are now critical for balancing grids with higher wind and solar penetration. A standardized, transparent benchmark for storage value capture supports investor confidence, enables accurate project financing, and facilitates the efficient allocation of capital to storage infrastructure.
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