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The energy markets offer incredible revenue opportunities for BESS assets. But a crucial challenge remains: these markets are ever-changing and inherently unpredictable. Even the best long-term market forecasts are generally not considered reliable. The sheer number of variables — weather patterns, policy changes, regulatory shifts, technological advancements, and changing supply/demand dynamics — makes long-term price predictions extremely difficult.

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The Investor’s Dilemma

This market unpredictability creates a significant problem for BESS asset owners. Unlike short-term trading positions, infrastructure like a BESS is built to last for decades — often 15 to 20 years or more. Many of the costs associated with building and operating these assets are fixed and known over this long lifespan: debt repayments, O&M contracts, lease agreements, and eventual repowering or decommissioning costs. This creates a fundamental mismatch:
  • Costs: Fixed, long-term, and largely predictable.
  • Revenues: Variable, short-term, and subject to significant market fluctuation.
The question this raises for any asset owner is uncomfortable but unavoidable: what happens if the energy market collapses, or prices for the services a BESS provides fall dramatically?
  • We can estimate how much a BESS makes today based on current market conditions.
  • We can model what it might make in five or ten years based on forecasts.
  • But a lot can happen in that time — a surge in renewable supply, new regulations, or changes in demand could drastically alter those projections and lead to significant financial losses.

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The Desire to De-Risk

This mismatch between the long-term fixed nature of infrastructure costs and the short-term volatile nature of market revenues means BESS asset owners have a strong desire to de-risk their investments. They need ways to secure more predictable income streams to:
  • Protect their capital over a long time horizon.
  • Demonstrate bankable revenue to lenders (making debt financing accessible).
  • Meet the fixed cost obligations they have committed to.
  • Enable portfolio growth by making new investments less risky.
Module 5 explores precisely how these significant BESS investments can be de-risked — through swap contracts, virtual battery auctions, and long-term tolling agreements.
Last modified on April 20, 2026