Merchant battery energy storage revenues in CAISO landed at an average of $2.33/kW-month for July 2025. This represents a decrease of 64.8% from July 2024.

Revenue from all categories declined year-over-year, with the exception of a minimal increase in Real-Time Dispatch (RTD) revenues.

​July 2024 was the highest-revenue month for CAISO’s grid-scale batteries since August 2023. Extreme temperatures a year ago increased price spreads, so the potential for some amount of year-over-year decline was expected.

However, non-merchant revenues make up a significant portion of BESS income in California.

Key Takeaways

• CAISO battery energy storage merchant revenues declined 64.8% year-over-year to $2.33/kW-month in July 2025, driven by smaller price spreads from mild weather and increased battery dispatch.
• The ZP26 zone continues to offer the strongest arbitrage opportunities - at least for the few battery energy storage systems sited in the zone. Median 4-hour Top-Bottom spreads of $4.7/kW were 38 and 47% higher than those in SP15 and NP15, respectively.
• The average price for one kilowatt of battery capacity in Resource Adequacy agreements is $8.77 over the first six months of 2025, up more than 12% from the same period last year.

Peak prices determine battery revenues in July

​Grid-scale batteries in CAISO have consistently earned the majority of their merchant revenues from Energy arbitrage in the Day-Ahead Integrated Forward Market (IFM). In July 2025, IFM revenues made up 72% of total income, compared to 67% a year prior.

The revenue mix is similar across the two periods; however, there is a stark difference in the headline numbers: $2.33/kW-month in 2025 vs $6.61/kW-month in 2024.

The reason? Top-Bottom (TB) spreads drive battery revenues, and July 2025’s TB spreads failed to match last year’s historical highs. In 2025, the average TB4 spread across the month was $105/MW, a 61.6% reduction from July 2024’s $273/MW.

Higher daily price peaks powered TB spreads in 2024, but in 2025, lower daily price troughs were the primary driver of variation.

While higher spreads were the biggest driver of July 2024’s higher revenues, Ancillary Service revenues were also $1.04/kW-month higher. Although Ancillary Services in CAISO were saturated by last July, the price of providing those services still represents the opportunity cost of not providing Energy.

With Energy prices so high last year, providing Ancillary Services was more lucrative. Thus, the large decline in Energy prices year-over-year explains why both Energy arbitrage and Ancillary Service revenue streams declined for battery energy storage systems.

​​Subscribers to Modo Energy’s Research can read the rest of the article to learn:

• How milder weather was a key driver behind reduced revenue opportunities for battery energy storage in July,
• Which batteries experienced the highest revenue opportunities in the month of July,
• How TB4 opportunities in July for batteries in CAISO compared to the rest of the year-to-date,
• And how capacity payments to batteries through CAISO’s Resource Adequacy have trended in the first half of 2025.

CAISO’s central ZP26 zone remains a place of strength for Energy arbitrage - at least at battery settlement points

​The median TB4 spread for battery energy storage systems located in ZP26 was $4.7/kW in July 2025. This was 47 and 38% above the $3.2/kW and and $3.4/kW values for NP15 and SP15, respectively.

This is a continuation of a longer running trend. In 2025 year-to-date, battery energy storage systems in ZP26 have consistently experienced the highest spreads across CAISO. The median cumulative TB4 spread for batteries in the zone through July 31, 2025 is $44.8/kW.