Price, hedge and transfer battery revenue risk

Modo Energy licenses the ME BESS indices for cash-settled derivatives, commercial contracts, and data. Counterparties use them to price, hedge and transfer exposure to battery storage revenue. The ME BESS GB indices are FCA-authorised under the UK Benchmarks Regulation and IOSCO-aligned.

Explore the benchmarks

ME BESS GB 2H Index

£127,374

/MW/year, annualised

FCA-AUTHORISED

Underlying: Realised revenue of operational battery storage assets, across all market services.
Coverage: Market- and duration-specific benchmarks across Europe, North America and Australia.
Transparency: Every methodology is published in full, with material changes versioned and documented.
Licensing: Licence terms are set by intended use, from derivatives to data distribution.

BASIS RISK

Lower basis risk than price-spread proxies

Price-spread proxies reference theoretical arbitrage. ME BESS benchmarks use realised battery revenue or calibrated dispatch models, so hedge payouts track asset performance more closely.

Illustrative.

Comprehensive

Includes all revenue streams, including ancillary services and capacity.

Realized

Calculated from actual dispatch outcomes rather than theoretical spreads.

Regulated

Independent, asset-level due diligence lenders and investors trust.

STORAGE REVENUE SWAPS

A fixed-for-floating swap on battery energy storage revenue

The storage revenue swap is the first instrument in the category. One party pays a fixed rate per MW per yr; the other pays floating revenue as published by the ME BESS index.

Risk transfer

Fix a defined share of merchant revenue for a chosen tenor.

Flexible terms

Market, tenor and notional are set per trade. Positions can be adjusted or unwound.

Efficient execution

A single standard confirmation shortens negotiation and time to trade.

SSE and Statkraft executed the first storage revenue swap referencing a Modo Energy index.

Read the announcement

MECHANICS

How a storage revenue swap works

Asset owner

Receives: Fixed
Pays: Floating

Fixed legIndex linked

Floating legAgreed rate

Counter party

Pays: Fixed
Receives: Floating

ME BESS GB index

Receives

FCA-AUTHORISED BENCHMARKS

PARTICIPANTS

Applications by participant

Exchanges and brokers

List and intermediate contracts on a regulated benchmark

01Authorized under the UK Benchmarks Regulation.
02Published methodology and policies.
03Standard swap contract terms.

Leaders and investors

Underwrite battery storage revenue supported by a transparent, regulated hedge.

01Public, independently administered benchmark.
02Quantifiable basis risk.
03Hedges can be layered by tenor.

Asset owners and traders

Hedge merchant revenue exposure on standard terms.

01Single-asset or portfolio hedging.
02Complements existing tolls and floors.
03Executed under existing ISDA Master Agreements.

Data vendors

Distribute ME BESS values to your clients under licence.

01Values delivered through our API.
02Full history for each benchmark.
03Display terms set per licence.

List and intermediate contracts on a regulated benchmark

01Authorized under the UK Benchmarks Regulation.
02Published methodology and policies.
03Standard swap contract terms.

BENCHMARKS

The ME BESS benchmark family

Market- and duration-specific benchmarks of battery energy storage revenue, covering 25 markets.

Trusted by

Framework

Benchmark determination

Construction
Rules-based asset and market selection, grounded in real-world operations.
Published criteria govern asset eligibility and market coverage, aligned with the structure, products, and price signals of each market.
Calculation
Algorithmic, repeatable, and fully traceable to source data.
Automated pipelines apply consistent logic to dispatch, pricing, and capacity data, with validation checks at each stage of calculation.
Review
Independently overseen, with a formal annual methodology review.
Each methodology is reviewed as market rules and products evolve. Material changes to logic, inputs or structure are versioned and published.
Delivery
Institutional-grade access, delivered directly into existing workflows.
Available in the Terminal and through the Modo Energy API, with licensing for use in commercial agreements, valuation models and reporting.

DOCUMENTATION

Standard confirmation for storage revenue swaps.

A single ISDA-based confirmation for swaps referencing any ME BESS index. Counterparties complete the economic terms and execute.

Standard confirmation (ISDA-based)

Version 1.0 · September 2026 · PDF

Template only. This document does not constitute legal advice.

Regulation and governance

Administered to the standards of global financial benchmarks.

Modo Energy (Benchmarking) Ltd is authorised and regulated by the Financial Conduct Authority (FCA) under the UK Benchmarks Regulation. FCA firm number 1042606. All indices are certified against the IOSCO Principles for Financial Benchmarks.

FAQs

Storage revenue derivatives are cash-settled contracts that transfer exposure to battery storage revenue between market participants. They reference the ME BESS index for the relevant market and duration. The storage revenue swap is the first instrument in the category.

A storage revenue swap is a fixed-for-floating contract. One party pays a fixed rate in £/MW/yr; the other pays floating revenue as published by the ME BESS index. Payments are netted and settled in cash.

A toll fixes an asset’s revenue under a bespoke agreement with a single offtaker. A floor provides downside protection only. A swap fixes a defined share of revenue on standard documentation and can be adjusted or unwound. Swaps complement tolls and floors, for example to bridge to a toll, cover the period between tolls, hedge the tail, or sit alongside a floor.

Day-ahead price spreads such as TB2 reflect wholesale arbitrage only. The ME BESS index is calculated from the realized revenue of operational batteries across all market services, so hedge payouts track asset revenue more closely.

Basis risk is the difference between a hedge payout and the revenue the asset earns. Modo Energy research quantifies the reduction for GB 2h assets relative to a day-ahead spread swap.

No. The swap is a purely financial instrument. The asset owner retains full control of dispatch.

Swaps are currently executed bilaterally on ISDA-based terms. The index and standard confirmation are designed to scale to clearing.

The ME BESS indices cover 25 markets across GB, Europe, the US and Australia, with 1h, 2h and 4h durations where available.

License terms depend on the intended use. Contact a storage derivatives specialist for details.

SSE and Statkraft executed the first storage revenue swap referencing a Modo Energy index in 2026.

Modo Energy (Benchmarking) Ltd. is registered in England and Wales and is authorised and regulated by the Financial Conduct Authority (Firm number 1042606) under Article 34 of the Regulation (EU) 2016/1011/EU) – Benchmarks Regulation (UK BMR).

Price, hedge and transfer battery revenue risk