Understanding the New Clean Energy Revenue Stack

As storage becomes more central to project revenue, what technical or procurement risks should long-term owners be watching most closely?

Jason Goodhand, DNV:

When we look at today’s commercial standalone storage and solar hybrid projects, the key revenue risk can be the transition from nameplate capacity to actual available energy in operation. We can’t look at BESS plants as simple black box equations in a financial model. Competition, tighter returns, more complex stacking and liquidated damages in off-take agreements mean there is less room for error and owners should focus on how state-of-charge accuracy, availability and system imbalances will impact real dispatchable capacity. One critical question is also whether capacity testing and performance guarantees truly align with contractual obligations or merchant revenue strategies, as they may not fully reflect how systems are dispatched in practice.

Degradation and augmentation planning are another area of uncertainty. While contracts define thresholds and triggers, there is often limited flexibility before augmentation is required — and in practice, augmentation may not match what was originally planned. In the United States and United Kingdom, many systems are only now approaching their first augmentation cycles, so real-world experience remains limited.

More broadly, long-term performance is still evolving. Having worked in storage for over a decade, earlier projects often used different chemistries, cooling strategies and system designs, while newer systems promise real improvements but have less long-term operating history. There is valuable learning from older sites, but also uncertainty in newer configurations that have not yet been proven over decades but only a few years. As well, innovation hasn’t stopped, units are getting taller and cells are getting bigger. Much of today’s degradation data is based on accelerated cycling and extrapolated aging, and while systems are expected to perform broadly as intended, there is still more to learn as the asset class matures.

Jeff Zwijack, Intertek CEA:

As battery energy storage systems (BESS) become a larger driver of project revenue, owners can no longer evaluate projects based primarily on upfront capital costs. The real question is how the system will perform over the next 15 to 20 years. Procurement decisions made early in development can have lasting implications for reliability, operational flexibility, augmentation requirements and ultimately project returns.

That means looking beyond battery specifications to assess factors such as supplier bankability, manufacturing quality, system integration, software maturity, cybersecurity and the long-term availability of service and spare parts. A lower-cost system today can become a much more expensive asset if those risks are not properly evaluated.

Investors and lenders are also placing greater emphasis on safety, degradation, warranties and lifecycle performance. They want evidence that battery technologies have demon- strated field performance, robust thermal management, validated safety testing and degradation characteristics that align with project operating assumptions. Warranty terms should clearly define capacity retention guarantees, throughput limitations, augmentation responsibilities and performance remedies. However, even a well-structured warranty is only as valuable as the supplier’s ability to support those obligations over the 15- to 20-year life of the asset.

As storage revenues become increasingly tied to energy arbitrage and ancillary services, project value will depend less on installed capacity and more on the system’s ability to operate safely, reliably and predictably throughout its life. Independent technical due diligence and quality assurance have become critical tools for identifying and mitigating risks before they affect project performance.