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The grid-scale battery, the asset that charges when power is cheap and discharges when it is dear, and earns a revenue stack of energy arbitrage, frequency and ancillary services, and capacity or tolling payments, expressed as an annual margin per MW. Merchant revenue is volatile, that is the risk, while a tolling or capacity contract gives a floor. Pick a real project below and follow it through the technology, the model and a working returns model.
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Drag the sliders to see what earns the money, the power (MW), the revenue captured per MW per year, and how much of the merchant revenue stack is actually captured. Drop the capture to see the merchant-revenue risk.
A grid-scale battery earns a stack of revenues, energy arbitrage (charge cheap, discharge dear), frequency and ancillary services, and capacity-market or tolling payments, expressed as an annual gross margin per MW. The cost base is light: O&M and an augmentation reserve to replace cells as they degrade, so EBITDA margins are high. The big choice is the revenue regime. A merchant battery captures the full, volatile stack, higher return but real risk, since prices and service revenues fall as more batteries enter (saturation). A tolled or contracted battery gives up upside for a stable floor, a lower but secure return. Duration (the hours of storage) sets how much energy it can shift and drives the build cost (~£0.5–1.0m/MW for 1–2 hours). Drop the merchant capture on a merchant battery and the return collapses, the central risk of the asset class.
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See also the Battery dispatch & arbitrage simulator, charge, discharge and the price spread in action, and the Cash-flow & DCF model.