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A vehicle combining fixed revenue with revenue that moves. Britain's listed fund doubled its contracted share, and in Japan a bond has been issued on a fixed-revenue base.

A battery resembles a power station, but burns no fuel. It resembles a transmission line, but stores electricity rather than carrying it. The closest reading is to see it as a revenue vehicle. Two kinds of revenue go into the vehicle.

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A battery's revenue vehicleFixed revenue (the base)Seat fees (capacity market); tolling contracts(for extra-high voltage, the state's 20-year auction too)Moving revenue (the top-up)Arbitrage from storing cheap and selling dearBalancing standby feesMoves with weather and marketBanks and bonds attachUpsideFloor
Fig. 1 — A battery's revenue vehicle. Fixed revenue below (capacity market, the state's 20-year auction, tolling contracts) forms the base; moving revenue above (arbitrage from storing cheap and selling dear, and balancing) is the top-up.

Fixed revenue: seat fees, 20-year contracts, tolling

The seat fee (capacity market) is payment for a commitment to deliver in the evening, and is settled up to four years ahead. A tolling contract is one in which a utility leases the whole storage plant, pays a fixed rent and operates it itself. Large extra-high-voltage projects can also access the state's auction guaranteeing twenty years of fixed revenue. In Japan, Tokyo Gas began in 2024 and now holds three 20-year tolling contracts totalling 110 MW (with six projects and 300 MW planned for operation).

Moving revenue: arbitrage and balancing

The spread from storing cheaply at midday and selling dear in the evening, and balancing standby fees, move year to year with the weather and the market (48-16). Both the upside and the downside show up here.

Abroad, the fixed share is rising

On 30 September 2025, Italy's transmission operator Terna ran its first auction to buy battery capacity on 15-year fixed terms, awarding 9,968 MWh (15 projects initially, 14 after one withdrawal, averaging 6.6 hours) at an average of €12,959/MWh per year. That is close to a third of the €37,000 cap, and bids came in at four times the tendered volume. Winners return 80% of profits earned in the balancing market to Terna. Australia's federal government, through its Capacity Investment Scheme guaranteeing a revenue floor and ceiling, selected 16 projects totalling 4.13 GW / 15.37 GWh in its third round (September 2025) and 15 projects totalling 4.2 GW / 16.1 GWh in its eighth (June 2026). The eighth round drew 73 bids totalling 76.4 GWh, roughly five times the tender (WattClarity). Britain's listed fund Gore Street doubled its contracted share of revenue from 15.2% in the year to March 2025 to 30.8% in the year to March 2026 (company annual report).

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How different countries build fixed revenueJapan20-year auctionFixed capacity revenue; returns roughly 90% of market earningsJapanTollingTokyo Gas, 20 years, 110 MW cumulativeItalyMACSE (15-year fixed)9,968 MWh at €12,959/MWh per year; returns 80% of profitsAustraliaCIS (floor and ceiling)Round 3: 4.13 GW; round 8: 4.2 GW (June 2026)BritainCapacity market (up to 15 years)Tightening how seats are counted year by year (de-rating)California, USARA (long-term seat contracts)e.g. 12-year contracts
Fig. 2 — How different countries build fixed revenue. Sources: Terna, 1 October 2025; Australian DCCEEW, 16 September 2025; NESO and the EMR Delivery Body; CPUC; OCCTO and Tokyo Gas.

Fixed revenue, and capital, have started arriving in Japan too

In April 2026, Mizuho Securities, CHC Japan and ORIX Bank arranged Japan's first project bond — ¥10bn — on a 49 MW storage plant in Ojiya, Niigata, rated "A−" by Rating and Investment Information. The revenue base is a 20-year tolling contract with Tokyo Gas. In June the same year, Kansai Electric Power, Kinden and MUFG Sustainable Energy formed a ¥6.5bn fund to invest in extra-high-voltage storage plants totalling around 250 MW. Where fixed revenue exists, banks and bonds attach. Domestic examples have started to appear.

How an investor should read this
A battery is a fixed-plus-variable vehicle, and Britain's listed Gore Street fund raised its fixed share from 15.2% to 30.8%. In Japan the routes to fixed revenue are the capacity market and tolling contracts (plus the state's 20-year auction for extra-high voltage). Storage plants that have secured fixed revenue have attracted bonds and banks (¥10bn, A−, April 2026). Buying with leverage is starting to appear domestically. Design that can capture fixed revenue — duration, connection year, counterparty — determines the vehicle's value.
The questions in this series
I. Why the grid ran without batteries in the past
  1. 48-2The grid used to run fine without batteries, didn't it?
  2. 48-3What disappears from a grid with fewer spinning machines?
  3. 48-4Why "ten seconds"?
  4. 48-5Does more renewables mean more balancing power is needed?
II. Why thermal, nuclear and pumped storage are not enough
  1. 48-6Can't thermal just do the balancing?
  2. 48-7If nuclear grows, do we stop needing batteries?
  3. 48-8Wouldn't more pumped storage be enough?
  4. 48-9Where does the balancing power that the market failed to buy come from?
III. Where demand and the generation mix are heading
  1. 48-10Why do data centres point to batteries?
  2. 48-11What happens to solar from here?
  3. 48-12Thermal volume, nuclear operation, demand — what next?
  4. 48-13How much battery capacity is actually coming?
IV. The money, and what the state really wants
  1. 48-14Does the government actually want more batteries?
  2. 48-15What does battery storage resemble as an infrastructure investment? (this article)
  3. 48-16They say the earnings will thin out. Is that true?
  4. 48-17Can you copy the overseas playbook and make money in Japan?
  5. 48-18How much battery storage will Japan ultimately need?
  6. 48-19Is a battery the same wherever you put it?
The one question beyond the 1848-20 What do you pay, and what comes back?The answer differs by project, so we have built a calculator whose dials are made only from published figures. You can move unit price, clearing rate, seat fee, arbitrage spread and construction cost yourself.

Sources

Supervised by
Shinya Nakashima(Representative Director, Science X Inc.; Ph.D. in Engineering)

Works on the development, sale and technical due diligence of grid-scale battery storage plants. This column is written and supervised on the basis of hands-on transaction and evaluation practice.