On Indices for BESS

Is it an index? Three tests.

More thoughts about BESS and energy markets while on holiday in China. This post is obviously not about China (although there’s so much to say), but influenced by the general attitude of open-minded, friendly and pointed conversation that one falls into so easily here, and by reflections on how that inclination relates to language.

There are at least three battery index initiatives for the German BESS market, see: here, here, and here. But what do we talk about when we talk about indices? This post proposes that we adapt three tests from the academic literature on financial indices to ground a developing conversation.

The third link above leads to an optimiser’s LinkedIn announcement that it is “building the first-ever battery index for the power trading business.” This produced a lively debate in the comments involving the creators of the three different indicators. The following questions went through my mind as I read through the different views:

• Is “index” the right term to describe what is being aimed at?

• What are the respective indices trying to achieve?

• What does the index debate reveal about the “BESS industry” (in Germany)?

Let’s start with the first question.