Energy project finance reference. This educational resource covers project investment and financing concepts. It is separate from Jaken Energy’s commercial electricity and natural gas procurement service; it is not a financing offer or a promise of funding.
Storage arbitrage: efficiency, wear and realistic revenue
Storage arbitrage seeks to buy or absorb lower-value electricity and discharge at a higher value. The gross price spread is not the profit. Charging energy, conversion losses, auxiliary consumption, fees and battery wear must be included.
What to evaluate
Use a dispatch simulation with documented forecasts and operating constraints. Perfect foresight can materially overstate results. Capacity retained for backup or another market commitment may be unavailable for arbitrage. Avoid counting the same MWh or reserved MW in incompatible revenue streams.
Build a defensible comparison
Illustrative arithmetic: at 90% round-trip efficiency, delivering 1 MWh requires about 1.111 MWh of charging energy. An assumed $30/MWh charging price costs about $33.33. Selling at $60/MWh leaves about $26.67 before fees, degradation and other costs. These prices are hypothetical, not a market quote.
Documents and questions to prepare
- Forecast method and dispatch limits
- Energy losses and charging tariff
- Warranty throughput and wear cost
- Revenue compatibility and augmentation
For commercial property owners
Start with the property’s actual accounts, lease responsibilities and plans for ownership or sale. Keep commodity procurement, building improvements and project investment as separate decisions. Include the costs you retain and the savings you retain after tenant reimbursement. An improvement that lowers a tenant-paid expense may benefit tenants without producing the same increase in owner income.
Prepare a base case and a downside case using dated evidence for costs, revenue and funding. Any financing rate, tax benefit or return is a project assumption until supported by current documents. Legal, tax, engineering and lender review should follow the actual transaction.
For the existing property’s supply-cost decision, use the contract-cost calculator or request a property energy review.
Primary sources
Reviewed October 12, 2026. Program rules, tariffs and financing terms should be checked again before a transaction.