Can battery tariff arbitrage pay back for your business?

Battery arbitrage uses electricity bought at a lower price to displace a higher-priced purchase or support permitted exports later. In the illustration, assumed 90% round-trip efficiency reduces useful output before costs; actual efficiency needs equipment evidence [S1]. Your tariff spread, operating opportunities and funded contract determine whether the remaining value can repay the investment. Checked October 2026.

Last checked 16 October 2026

What does battery tariff arbitrage mean for your business?

Arbitrage means using a price difference across time. Your battery charges when electricity is cheaper, then discharges to reduce purchases when electricity is dearer. Export trading is a separate case with its own permission, metering and purchase terms. The Carbon Trust describes tariff shifting as a business storage use [S1].

A kilowatt (kW) measures power; a kilowatt-hour (kWh) measures energy. Check both the charging power and the energy available for discharge. Ask for a schedule against your actual demand and tariff. A daily price chart alone does not establish that your battery can complete the proposed operation.

Read business electricity prices and battery sizing before comparing equipment offers.

How wide must the tariff spread be after losses and wear?

Use output energy × avoided price − charging energy × charging price − operating costs. Round-trip efficiency describes how much useful energy returns after charging and discharge. Ask for equipment evidence at the intended operating conditions, including auxiliary consumption. The Carbon Trust identifies efficiency and cycling among the parameters to assess [S1].

In the assumptions below, 100 kWh purchased returns 90 kWh. Charging at £0.10/kWh therefore costs £10 / 90 = £0.1111 per useful kWh, before wear or fees. Adding an assumed £0.02/kWh wear reserve gives £0.1311/kWh before fixed costs. The avoided price must exceed that level for a positive contribution.

This is an illustration, not a quote or a tariff offer. Obtain your business contract’s actual time bands and charges. Check whether switching increases the price paid for electricity that cannot be shifted. Test the whole site bill, rather than valuing the battery in isolation from a changed supply contract.

What could the battery earn, and how many years until payback?

All figures are assumptions. This illustration shifts purchases for site use; it includes no export trading, solar income, grant, tax relief or borrowing. Costs exclude recoverable VAT; check your position with your accountant. A wear reserve is included, but it is not a complete replacement forecast.

The assumed cycles require sufficient charge windows and site demand during expensive periods. They are operating scenarios, not a claim about achievable annual cycling. Ask for interval modelling before replacing these inputs with a site forecast.

Net contribution per cycle = 90 × £0.30 − 100 × £0.10 − 90 × £0.02 = £15.20. Annual net value = cycles × £15.20 − £500. For the mid case, 200 × £15.20 − £500 = £2,540.

For funded cases only, assume the provider recovers the calculated avoided-purchase value through a metered service settlement, pays energy and operating costs, then pays the host its agreed net share. Thus the host receives the share rather than retaining the whole bill benefit as well. This is a hypothetical contract method, not evidence that such an offer is available for your site.

Simple return on investment (ROI) = annual host result / host capital × 100. Payback = host capital / annual host result. The ranges reflect the assumed capital costs, not a statistical forecast.

These are undiscounted arithmetic results. Long paybacks may exceed the supported operating life of the offered equipment; do not assume the calculated cash flow persists until recovery. Self funded has avoided-cost benefit, not electricity sales income. Fully funded has no host capital payback in this example.

Which funding terms and site limits could change the result?

For fully funded, confirm the provider pays capital and operation and state exactly how your income is measured. For part funded, check ownership, shared costs and buy-out rights. For self funded, budget for equipment operation and retain the net benefit. Ask your solicitor to review term length, exit, access, damage and removal provisions.

Your distribution network operator (DNO) manages the local network. G99 is the engineering recommendation for relevant generation connections. UK Power Networks includes storage in its small generation application process [S3]. Ask your own DNO to confirm the combined equipment and import/export limits before procurement.

If export is proposed, check the electricity purchaser’s terms. Ofgem’s Smart Export Guarantee storage guidance distinguishes eligible renewable generation from other exported electricity [S2]. Keep grid trading separate from solar self-consumption and export.

The government’s flexibility roadmap recognises battery fire risk and the need to manage it [S4]. Request a site safety assessment, insurer requirements and an installation plan covering access and emergency arrangements. Read battery fire safety before choosing a location.

What should you do next?

Request a whole-site bill comparison, a supported cycling forecast and itemised funding terms.

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