Applications: Stationary Energy Storage

Revenue Models / Summary of BESS Revenue Drivers (Merchant / Contract) BESS play a critical role in integrating renewables, providing grid stability, and enabling energy arbitrage. Revenue models for BESS broadly fall into two categories: Merchant (market-exposed): Relies on wholesale market dynamics (e.g., energy arbitrage, ancillary services like frequency regulation). Contractual: Secures predictable income through agreements such as tolling (fixed fees for availability), power purchase agreements (PPAs), or capacity payments (e.g., Resource Adequacy in CAISO). Prioritizes stability, though it caps potential returns. Hybrid models, blending both merchant and contract revenue, are increasingly common, as are hedge agreements, which provide revenue floors and other mechanisms in merchant markets. Both of these approaches serve to mitigate risk to the project. The choice of business model is fundamentally driven by revenue risk considerations. The spectrum reflects a trade-off between revenue certainty and exposure to market volatility.

Source: Macquarie (table)

Extracted from the PDF; charts and images may read imperfectly.