​Under an offtake or tolling agreement, battery owners sell the right to dispatch their assets to another party. The owner receives fixed or variable revenue in exchange for access to their flexible batteries. These structures provide certainty in a market where merchant revenues can swing widely from year to year, offering stability for developers and investors alike.

With this year’s BESS revenue declining compared to 2024, the value of offtake agreements is apparent. They not only de-risk storage investment but also attract financing from parties who may otherwise hesitate to support merchant-only projects.

​What offtake structures are available?

Structuring a tolling or offtake agreement depends heavily on the asset owner’s risk appetite and financing needs. These deals fall on a spectrum from fully contracted, low-risk agreements to fully merchant positions with high upside but substantial volatility.

Tolling / PPA

The offtaker pays a fixed $/MW fee for full access to the battery’s capacity. The asset owner locks in stable revenue, while the offtaker manages all upside and downside from arbitrage and Ancillary Services.

A physical tolling agreement gives the offtaker direct dispatch rights over a specific battery or generation asset. The offtaker schedules, bids, and controls the physical asset, while the owner receives a fixed or structured payment regardless of how it is used.

A virtual tolling agreement is financial. The asset owner continues to operate the asset, but the offtaker takes on the market risk and return through a contractual swap or settlement mechanism. The offtaker gets the economic exposure of dispatch without physically scheduling the asset.

Floor + Revenue Share

The offtaker guarantees a minimum payment per MW (a floor), with upside shared as a percentage of market revenues. This hybrid strikes a balance between predictable revenue and exposure to market highs.

Revenue Share

All payments depend on actual market revenues earned, with no floor or fixed element. This increases risk for the owner but allows shared exposure to strong market conditions.

Merchant

The battery participates directly in wholesale markets without any contractual hedges or guarantees. This exposes the owner fully to volatility and uncertainty, but they also capture all upside.

How have offtake agreements been implemented so far?

While information about offtake agreements in ERCOT is limited, they are an increasingly attractive option to secure returns. This is especially true in a market where BESS revenues vary significantly year to year.

There are currently five operating projects under known tolling agreements, with seven additional tolled assets expected to come online by the end of 2026.

• Jupiter Power owns Crossett 1, the first known tolled battery in ERCOT, and entered an offtake agreement with Equilibrium Energy. See how the partnership impacted revenues here.
• Building on the success of Padua BESS 1, CPS Energy has entered into two additional tolling agreements with Eolian: Padua BESS 2 and Ferdinand. These resources are scheduled to reach commercial operations in the first half of 2026. This would brings CPS Energy’s total storage under contract to 400 MW.
• Cross Trails Storage is an asset owned by Energy Vault and optimized by Gridmatic. This project is notable for being the first known battery in ERCOT operated under a revenue floor contract, providing guaranteed revenue and reducing merchant exposure.
• Habitat Energy is optimizing a 50MW / 100MWh asset for Octopus Energy, who is tolling the asset from an unspecified owner. This contract marks Habitat’s entry into BESS tolling in the US, though the exact asset is unconfirmed.
• ​Equilibrium Energy is optimizing two assets on behalf of Ormat Technologies. The first one, Lower Rio BESS, began operations in September 2025, making it the most recent tolled battery to come online.

Third-party optimization

Not all asset owners choose full tolling structures. An alternative is to partner with third-party optimizers who provide bidding, dispatch, and trading services, including AI-driven autobidders. This approach allows owners to retain merchant exposure while reducing operational complexity.

Unlike a tolling agreement where the offtaker guarantees payment to the asset owner, under these other third-party partnerships, the asset owner pays a fee to the optimizer.

Third-party optimization helps capture value in highly dynamic markets, where intraday spreads and Ancillary Service prices can swing rapidly. For owners who are unwilling to fully relinquish merchant upside, this approach provides a way to outsource complexity without sacrificing potential revenues.

For a free contact list of U.S. BESS optimizers, see Modo Energy's curated list here.

This is Part 1 of a two-part series on tolling agreements in ERCOT. Read Part 2 for a quantitative analysis on how to leverage revenue forecasts to price a tolling agreement.

Subscribers to Modo Energy’s ERCOT Research can also access a full list of BESS assets and their associated owners and optimizers below.

For more, read our recent article on evolving offtake structures in the NEM.

For an up-to-date list of ERCOT assets, their owners, and their optimizers, download the file below.