Q & A: TERRA FIRMA periods. For many commercial and industrial sites, operational constraints mean a large portion of consumption falls within peak tariff windows. In those cases, exposure to peak pricing cuts directly into margins.
If peak demand is limited or irregular, the arbitrage opportunity is reduced, regardless of battery size. Understanding the load profile is fundamental before investing.
How much can businesses realistically save? Where peak demand is consistent and the battery is correctly sized and actively managed, we typically see electricity cost reductions in the range of 10-30 %, in some cases even more.
Arbitrage-led projects often achieve payback periods of three to five years when they are designed specifically for cost optimisation rather than adapted from backup-only systems. Savings depend on the tariff structure, seasonal variation, the site’ s load profile, and how well the system is operated over time.
What determines whether arbitrage works in practice? Working with an experienced provider matters. Arbitrage is not plug-and-play. Poor structuring at the outset can undermine returns for the life of the asset. The tariff structure is fundamental. Arbitrage depends on the size and consistency of the gap between peak and off-peak periods. Tariff changes over time also matter.
The site’ s load profile must show material and predictable peak demand. Correct sizing in both power and energy terms is critical. Oversizing dilutes returns, while undersizing limits savings. Reliable consumption data and a clear understanding of the tariff structure are essential for optimisation.
Arbitrage must also be aligned with other battery objectives, such as backup, to avoid conflicting priorities.
What are the common pitfalls businesses should be aware of? Treating arbitrage as a‘ set and forget’ function is one of the most common mistakes. Without active optimisation, value can erode quietly over time. Poor sizing, as stated earlier, is another frequent issue, particularly where batteries were originally designed for backup and later expected to deliver arbitrage savings they were not configured for.
Ignoring tariff changes or shifts in site operations can also undermine performance. Arbitrage strategies need to evolve as conditions change. Over-promising savings or export revenues remains a risk. Working with an experienced provider who models conservatively and understands tariff realities is essential to avoiding disappointment.
Can companies also export stored energy back to the grid to increase their returns? Exporting is not the core driver of the arbitrage case. Most municipalities do not allow export, and where they do, feed-in tariffs are typically low and inconsistent. In most cases, the stronger business case lies in using stored energy on-site to avoid peak pricing rather than relying on uncertain export revenue.
What are the best practices you can share from your experience on the ground? At Terra Firma, we define the operating philosophy from the outset and align priorities clearly with the client ' s. Savings projections are based on live site data and actual tariffs, using conservative assumptions around efficiency, degradation and availability. Once systems are operational, performance is actively monitored and adjusted to reflect changes in tariffs, seasons and site operations.
Long-term maintenance and optimisation is treated as essential to protecting return on investment over the life of the system.
What is the key takeaway for business leaders? As ToU tariffs become more widespread, and electricity prices continue to rise above inflation, arbitrage is fast becoming the primary driver behind new battery investments. If properly structured and actively managed, arbitrage enables businesses to reduce exposure to peak pricing, protect margins and regain a measure of control over one of their most volatile input costs. It is not automatic, however. It requires clear strategic intent, careful system design and disciplined operational management to deliver sustained value. �
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