White Paper | Tolls, floors and merchant models
White Paper | Tolls, floors and merchant models
Do higher risks mean higher returns for battery storage investors?
Battery storage investors are witnessing a shifting landscape in the sector, navigating the complexities of tolls, floors, and merchant models. As the energy storage market matures, there is a discernible trend suggesting increasing investor comfort with associated risks. While tolling arrangements and floor prices act to provide a predictable income, the merchant model, where revenues are tied to market prices, introduces an element of risk but also the potential for higher returns.
As stakeholders gain a deeper understanding of the risk-return dynamics within the battery storage sector, a more balanced and informed investment landscape emerges. This trend signifies a maturing market where investors are progressively embracing the potential of battery storage assets while strategically managing associated risks.
In this white paper we will explore whether investors are becoming more comfortable with long-term market price and structure risk? Are price floors worth the price being paid? And are tolls covering the cost of projects with reasonable IRRs?
