Tolling agreements for energy storage, such as Battery Energy Storage Systems (BESS), typically involve specific payment structures that provide a stable revenue stream while allowing for operational optimization by the off-taker or optimizer. The usual payment structures include:
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Fixed Payments:
- Capacity Payments: These are regular payments made to the developer or owner of the energy storage system for ensuring a certain level of capacity availability. This payment is often adjusted based on the system’s availability and efficiency metrics.
- Guaranteed Payments: In a tolling agreement, the off-taker provides a guaranteed payment in exchange for full control over the battery’s trading operations. This approach shifts market trading risks away from the owner and onto the optimizer.
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Variable Payments:
- Variable O&M Payments: These payments are made in addition to fixed capacity payments and are contingent on the actual energy dispatched by the system. They can be based on performance metrics such as round-trip efficiency and availability.
- Performance Adjustments: Payments may also include adjustments for factors like availability and efficiency, ensuring that the storage provider is incentivized to maintain high operational standards.
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Profit Sharing (Optional):
While not typical in traditional tolling agreements, some arrangements may allow the optimizer to capture and retain any revenue above the agreed-upon toll level. However, this is more characteristic of profit-share models, which differ from standard tolling contracts.
Overall, tolling agreements in energy storage are designed to provide a stable income for asset owners while leveraging the market expertise of off-takers to optimize trading revenues.
Original article by NenPower, If reposted, please credit the source: https://nenpower.com/blog/what-are-the-typical-payment-structures-in-tolling-agreements-for-energy-storage/
