​Battery revenues in Great Britain have seen significant shifts over the past two years, shaped by changing market conditions, evolving policy, and new investment structures.

In our latest livestream, Modo Energy’s Shaniyaa Holness‑Mckenzie and Joe Bush explored how developers and investors can de-risk returns in a maturing GB market.

​With 6.3 GW of battery capacity already online, attention is turning to how projects can secure stable cash flows in the face of merchant volatility, policy reform, and shifting offtake dynamics. This session examines what’s driving those risks and the mechanisms emerging to manage them as the market grows toward 2030 and beyond.

1) Battery revenues are driven by two key forces

Over the past two years GB battery revenues have rebounded from a weak 2024 to a stronger 2025, rising from around £51k/MW/year last year to £72k/MW/year this year.

The monthly profile remains choppy, with winter highs and summer dips clearly visible in the stacked revenue chart. In other words: the level is higher, but the volatility hasn’t gone away.

That volatility reflects two co‑drivers. First, wholesale price spreads (day‑ahead and intraday) set the core arbitrage opportunity; when spreads compress, revenues usually follow, and when spreads widen, they lift the stack.

Second, revenues from the Balancing Mechanism have become an increasingly important part of the picture. Dispatch volumes have risen steadily since early 2024, but the in-merit dispatch rate has flattened through 2025. Overall, monthly revenues don’t always move one‑for‑one with spreads. This is why we’ve seen months where revenues held up despite softer spreads, and vice versa.

2) Market reforms can impact revenues in both directions

​In September, changes to Applicable Balancing Services Volume Data (ABSVD) rules reshaped how batteries participate in frequency response. The reform allowed non-Balancing Mechanism units to compete in Quick Reserve, removing their imbalance revenue payments and levelling the field with BM-registered batteries.

The result was an uptick in Dynamic Regulation prices and contributed to an £8k lift in frequency-response revenues across the fleet.

​Looking ahead, P462, the proposal to remove subsidy costs from bid prices in the Balancing Mechanism, could alter how batteries compete with wind in constrained areas, particularly in Scotland.

​Meanwhile, GC0166 (introduction of energy parameters in the BM) and other ongoing reforms to reduce skip rates and improve dispatch accuracy should help address operational inefficiencies that have limited battery utilisation through 2024–2025.

3) Offtake structures: floors, tolls, and swaps (oh my!)

​As merchant exposure grows, investors and lenders are increasingly turning to structured offtake agreements to stabilise revenues. These contracts help de-risk battery projects by guaranteeing a portion of income or transferring market exposure to third parties—making them crucial for securing finance at lower costs of capital.

A range of different offtake structures are emerging in Great Britain.

​Floors vs tolls: Floors and tolls are two of the most common structures used in the GB market today. In a floor agreement, the optimizer tops up revenues when they fall below an agreed level, protecting the project during low-revenue months while allowing upside in stronger markets. A toll, by contrast, provides a fixed annual payment—often higher than a floor but with no merchant upside.

In a low-revenue year (~£40k/MW/yr), the floor ensures a minimum return, while in a strong year (~£70k/MW/yr), toll contracts offer stability at the cost of additional profit potential.

Insurer-backed floors: In newer structures, the optimizer doesn’t need to provide the floor directly. Instead, an insurer can underwrite it, with the project owner paying an annual premium rather than a higher optimizer fee. This approach maintains the flexibility of a merchant offtake while improving bankability, as lenders are often more comfortable with the credit strength of insurers.

Day-ahead swaps: Another approach is the day-ahead swap. This is a derivative contract that replaces volatile day-ahead revenues with a fixed return. By flattening month-to-month income, it provides the predictable cash flow required for debt financing while allowing equity investors to retain some exposure to merchant upside through other revenue streams.

4) Long-duration storage and market impacts

​The government’s long-duration storage cap-and-floor scheme is now in the assessment stage, with no target yet confirmed. Based on Future Energy Scenarios, total procurement could fall anywhere between 2.7 GW and 7.7 GW of capacity.

At either end of this range, the impact on the merchant battery market looks different.

A smaller scheme would leave merchant build-out largely unchanged, while a larger rollout could divert capital and grid access toward subsidised projects, reducing merchant build by around 11% through the early 2030s.

Even so, lithium-ion systems are expected to remain the dominant technology, with the scheme primarily improving bankability for long-duration and alternative storage types such as pumped hydro and flow batteries.

5) Build‑out and operations: records and reliability

​Since September 2024, GB battery energy storage systems have maintained an average availability of 95%, down slightly from 97–98% over the same period last year.

Part of the dip reflects the record pace of new commissioning, with recently completed sites taking time to ramp up to full operational performance. Many of these new systems temporarily appear offline during testing phases which contributes to the short-term reduction in average availability.

Importantly, operators are being strategic in how they plan downtime. When revenue-weighted availability is compared with total uptime, it is relatively similar, meaning operators are not missing out on high revenue days and are not more online on low revenue days.

Day-to-day revenue variation in Great Britain is limited compared to markets like ERCOT but as the GB storage market evolves, availability management is emerging as a key factor in de-risking BESS returns—ensuring that assets remain online during high-value periods and can reliably meet the performance thresholds required under offtake structures or financing agreements.

​Full slides from the livestream are available below