C&I Energy Storage · Kriya Partners
The revenue stack a battery is chasing determines its ideal duration and dispatch pattern. Both of those are design inputs - which means understanding how a battery earns isn't optional background knowledge for an engineering firm. It's part of the brief.
The short version
Three ways a battery earns - and why it matters before anything gets sized
Batteries earn money in three ways, and which combination a project targets changes what the right design looks like. Revenue intent isn't financial advice territory for an engineering firm - it's a design input.
A battery built to chase 4-hour capacity payments needs different hardware than one built for 30-minute arbitrage peaks. A merchant project selling into the open market operates differently than one with a signed long-term contract. Getting the revenue model wrong at the start means the system won't perform the way the pro forma assumed - and no amount of good permitting fixes that afterward.
How batteries earn
Arbitrage, ancillary services, and capacity payments each reward different battery behavior
Arbitrage
Charge cheap (2am, $20/MWh), discharge expensive (6pm, $120-200/MWh). Revenue comes from price spread capture. Rewards flexibility and fast response - the battery has to be available when prices move, not just when convenient. Duration matters here: a 4-hour battery can span the whole peak window; a 2-hour battery misses the tail.
Ancillary services
Getting paid to be ready. Frequency regulation, spinning reserve - the battery holds capacity available and responds in milliseconds when the grid calls on it. It often doesn't fully discharge. Revenue comes from the standby commitment, not just energy dispatched. Fast response is the asset; duration matters less than availability and reliability.
Capacity payments
Getting paid to exist. A utility or ISO pays per kW per month for the battery to be available during the worst-case hours of the year - peak summer demand, extreme winter cold. Duration is rewarded directly: a 4-hour battery qualifies in most markets; a 2-hour battery may not. This is often the steadiest, most predictable revenue stream.
Most real-world projects stack more than one. A battery in California might earn capacity payments from a Resource Adequacy contract, ancillary services revenue in the open market, and some arbitrage on top of that. The mix depends on which market the project is in and how the project is contracted.
Merchant vs. contracted
A long-term contract is worth more than 5x going it alone in some markets
Merchant projects sell into the open market and take the risk that prices will be good that week. Contracted projects have a signed deal - a utility or corporate buyer agrees to pay a set price for availability or output over a multi-year term. The contracted case is more stable and, in markets with real capacity programs, usually more lucrative.
The $14.83 vs. $2.77 number from CAISO in 2025 is a real, sourced example - not a hypothetical. The difference is entirely whether someone pursued a contract before the project was built or just sent the battery into the wholesale market and hoped for the best.
If a project is solar-paired and the client is using a tax credit structure that restricts grid-charging, confirm that early. Some ITC structures limit the battery to charging primarily from the co-located solar array - not the grid. That constrains both the revenue-stream options and the design brief in ways that need to be addressed before sizing, not after.
How markets differ
ERCOT, PJM, and CAISO reward different behavior - and design should reflect that
The right revenue stack depends heavily on which ISO the project is in. The same battery, designed the same way, earns very different amounts in different markets - and for different reasons.
Energy-only market - no capacity auction. Batteries earn through ancillary services and arbitrage. Revenue is purely market-driven, with no contracted floor. Currently in a cyclical low (~$2.37/kW-month in 2026) because too many batteries chased the same ancillary payments and drove the price down. High upside potential; no safety net.
Runs a formal capacity auction and pays for Regulation (fast grid balancing). A 2025 rule change made Regulation the dominant revenue stream - around $62/kW-month as of early 2026. That number is real but likely to compress as more batteries enter and compete for the same payments. Currently the best-paying market, for a specific and temporary reason.
No centralized capacity auction - utilities sign bilateral Resource Adequacy contracts directly with battery owners. The steadiest market: wholesale-only pays ~$2.77/kW-month, but a signed RA contract pays ~$14.83/kW-month. Having a contract before the project is built is the difference. Pursuing one after commissioning leaves most of the value on the table.
The one-sentence version: ERCOT pays for being fast and available with no floor, PJM is currently paying well for grid-balancing because so few batteries are built there yet, and CAISO rewards having a real contract over selling into the open market. Each of those shapes what the right design brief looks like.
Why this is a design input
Duration mismatch between market and design is a real risk
A client says they want a 2-hour battery because "that's standard." They're in CAISO, where Resource Adequacy contracts specifically pay more for 4-hour batteries. The design isn't technically wrong - it just leaves value on the table that was available before the first drawing was made.
The same logic applies to standalone vs. solar-paired. A standalone battery can charge from the grid at any time and chase any revenue stream - arbitrage, ancillary services, whatever the market is paying. A solar-paired battery, depending on the tax credit structure, may be restricted to charging mainly from the co-located array. That changes both the revenue ceiling and how the system should be sized and controlled.
These are questions that belong at the start of the design brief - not because the engineering firm is managing the client's revenue, but because duration, dispatch assumptions, and charging constraints show up directly in the interconnection study, equipment sizing, and controls configuration. Getting them wrong upstream creates design work that was done for the wrong system.
A battery designed around the wrong revenue assumptions will interconnect, get permitted, and get built. It just won't perform the way the model said it would. The time to catch that mismatch is during the design brief - not after commissioning.
Kriya handles BESS design, engineering, and permitting across all 50 states. We work through the use case, revenue assumptions, and market-specific requirements before anything gets sized - because all three change what the right system actually looks like.
