Helios Capital“What return does a battery storage system deliver?” is the question that stands at the end of almost every conversation — and the hardest to answer honestly. Because unlike a bond, there is no fixed figure: a grid-scale battery earns its money on the electricity market, and that market moves. What can be said responsibly is where the revenue comes from, what order of magnitude it sits in, and which levers shift an investor's effective return up or down. That is exactly what this article sets out.
Where does a battery storage system's return come from?
A battery storage system's return arises from trading flexibility: the battery buys power when it is cheap or negatively priced and sells it when it is expensive — and it provides capacity to the grid for stabilisation. Unlike a solar or wind plant, which earns from a single source (the feed-in tariff or the spot price), a battery combines several revenue sources in parallel. This 'revenue stacking' — switching cleverly between markets across the day — is the actual core of the business model and the reason storage is regarded as more robust than pure generation. The overview of the investment routes themselves is in Investing in battery storage: the options at a glance; here the focus is on the revenue.
The revenue sources in detail
A well-optimised grid-scale battery can combine up to six revenue sources. The three most important families:
- Spot-market arbitrage (day-ahead & intraday): the battery exploits price differences across the day — charging in the cheap hours, discharging in the expensive ones. As volatility rises, this source grows; it is regarded as the long-term backbone of revenue.
- Balancing power (FCR, aFRR, mFRR): the battery holds capacity ready to offset frequency swings in the grid. Merely holding it ready is paid for (capacity price), plus the actual call-off (energy price) — today the strongest revenue source, but with limited market volume.
- Capacity and system services: payment for firm capacity and grid-supporting functions. Their significance and design depend heavily on the regulatory framework.
| Revenue source | Indicative magnitude | Character |
|---|---|---|
| Day-ahead arbitrage | ~€91,000/MW/yr | grows with volatility, long-term backbone |
| Balancing power (FCR + aFRR) | ~€179,000/MW/yr | strong today, volume limited |
| Total (revenue stacking, optimised) | ~€300,000–500,000/MW/yr | only with active multi-market marketing |
What matters about these figures: they are snapshots of a moving market. In the first quarter of 2026 alone, the revenue potential per megawatt swung between a low of around €95,000 in February and almost €200,000 in March. Anyone judging a storage return should therefore never look at a single month, but at annual and multi-year averages — and at the quality of the marketer who shifts between the markets.
What return is realistic?
Realistically, the unlevered return (IRR) of a newly commissioned German grid-scale battery sits, in the base case, in a range of roughly 12 to 14 percent per year — four-hour systems tending to the upper end, two-hour systems to the lower. These are project returns over the lifetime, not guaranteed distributions. The second figure is the decisive one: in an adverse market scenario, the same asset can fall back to an IRR of around 5.5 percent. This bandwidth — not the flattering midpoint — is the honest answer to the return question.
Why does the return fluctuate — and will it fall in future?
A battery's return lives off the volatility of electricity prices — and that is also where its risk lies. The more storage comes online, the more it flattens the very price peaks it lives off (this is called 'cannibalisation' of revenue). On top of that comes a shift in the revenue mix: in 2026, around 55 percent of storage revenue still comes from system services (FCR, aFRR) — but these markets are small (together only about 4.5 GW) and fill up faster. Market analyses expect that by 2030 the lion's share of revenue (up to 95 percent) will come from day-ahead and intraday trading. For investors this means: early, well-connected projects benefit from the balancing markets that are still lucrative today, while the long-term return depends more strongly on spot-market volatility.
A second factor is the grid connection itself: over 700 GW of battery storage sits in Germany's connection queue, with only a few gigawatts actually connected. A project with a secured, unrestricted grid connection is therefore worth more than one with a constrained connection — and that feeds straight through to the achievable return. Which risks structurally threaten the return, and how they can be addressed, is a topic in its own right that an honest return assessment must always take into account.
How the tax lever changes the effective return
With an entrepreneurial direct investment, a second lever joins the market return that no share and no fund offers: depreciation. Via the investment deduction (IAB) and the special depreciation (Sonder-AfA) under §7g EStG, a large part of the investment can be claimed for tax purposes as early as the investment year. This does not change the storage system's market return, but it does change the effective return on the equity employed: the tax refund flows back early and lowers the capital really tied up. How that effect works out in numbers is shown in the worked example in IAB under §7g EStG: example calculation for battery storage; why the effective equity outlay often turns out far smaller than the nominal sum is set out in How much equity is actually required?. Which depreciation combination works most strongly, and when, is placed in order by Sonder-AfA §7g (5) vs. declining-balance AfA §7 (2): which combination, when?.
Gross vs. net: what is left after costs and tax
The finest project IRR says little if you do not know how much of it reaches the investor. Between the battery's gross revenue magnitude and the investor's net return lie several layers: marketing and asset-management fees, operating and insurance costs, any debt financing — and finally the taxation of the ongoing income. A robust return analysis works through these layers cleanly, instead of advertising a gross figure. Which fees a direct investment involves — and which ones are happily hidden — is made transparent by Transparent costs: which fees a direct investment involves — and which ones are hidden.
Guaranteed return? A warning sign
When a provider promises a fixed, guaranteed return on a storage direct investment, it is worth a second look. First, a guarantee contradicts the market mechanics: revenue that depends on the electricity price cannot be guaranteed without shifting the risk to another level. Second — and decisive for tax — the tax authority only recognises the §7g lever if you are economically and entrepreneurially invested in the asset and bear the entrepreneurial risk. Constructions with a firmly promised interest rate resemble a loan economically and can cost you precisely that tax advantage. An honest return statement is therefore always a range with named assumptions — never a guaranteed pinpoint figure. Further warning signs and the right questions to put to any provider are collected in How to tell a trustworthy provider of energy direct investments.
What a direct investment in a concrete storage system can deliver in return terms can only be judged responsibly against real project figures. That is exactly what we do in a non-binding first call: revenue assumptions, costs, financing and tax effect — worked through on your situation, with named assumptions instead of an advertising figure.