About the Energy Arbitrage
Energy arbitrage charges a battery when electricity is cheap (off-peak) and discharges it when electricity is expensive (peak), earning the price spread. Under Time-of-Day (ToD) tariffs, the daily revenue is the usable energy moved times the peak-minus-off-peak spread, after round-trip losses and cycling cost.
Formula
Daily revenue ≈ Usable energy × (Peak − Off-peak tariff) × RTE − Cycle cost
- Usable energy
- Energy cycled per day (kWh)
- Peak − Off-peak
- ToD price spread captured (₹/kWh)
- RTE
- Round-trip efficiency (≈0.85–0.90)
- Cycle cost
- Amortised battery degradation per cycle (₹)
How to calculate it
- 1Identify the ToD tariff spread between peak and off-peak windows.
- 2Determine usable energy per cycle (capacity × depth of discharge).
- 3Apply round-trip efficiency — you buy more than you sell back.
- 4Multiply the net spread by cycles per year and subtract amortised degradation to get annual revenue.
Worked example
A 1 MWh usable battery capturing a ₹6/kWh ToD spread at 90% round-trip efficiency earns roughly 1,000 × 6 × 0.90 ≈ ₹5,400 per cycle; over ~300 cycles a year that is about ₹16 lakh gross, before degradation cost.
What you can calculate
- ₹/kWh spread
- Cycles/day
- Annual revenue
- RTE loss
Standards & references
Frequently asked questions
Is battery energy arbitrage profitable in India?
It depends on the ToD spread. Arbitrage alone is often marginal because round-trip losses and battery degradation eat into a thin spread. It becomes attractive when the peak/off-peak spread is wide, or when stacked with peak-shaving and ancillary revenue on the same asset.
Why does round-trip efficiency matter for arbitrage?
You must buy more energy to charge than you can sell on discharge — the difference is the round-trip loss (~10–15%). A lower efficiency widens the price spread you need just to break even, so efficiency directly sets arbitrage profitability.
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