Executive Summary

• Two-hour batteries in Great Britain currently have an average IRR of 10.7%, but returns vary significantly by region and market conditions.
• Battery revenues must rise by 40% to meet investor hurdle rates and justify new project development.
• Currently, Tesla, CATL, and BYD supply more than 80% of battery capacity in the market.

Subscribers to Modo Energy’s Research will also find out:

• How Capex reductions and revenue forecasts impact the long-term business case for battery storage.
• Why merchant risk remains the biggest challenge for battery investors and how tolling agreements are changing the landscape.
• Which battery owners and investment structures are shaping the UK storage market in 2024.

To get full access to Modo Energy’s Research, book a call with a member of the team today.

Introduction

Battery revenues have increased so far in 2024, from a winter low. We estimate that battery revenues must increase further to ensure an investable rate of return on the upfront Capex investment required - equivalent to around £550k/MW for a two-hour system.

But what level do revenues need to reach in the long-term for a positive business case, and how do investors manage the risks associated with these projects?