Time-of-use arbitrage

Time-of-use arbitrage treats the battery as a buy-low, use-high asset against your own meter. You charge it in the cheap import window, hold the energy, and run the site off it when the expensive window arrives, so fewer units are bought at the peak rate.

It is a real earner on the right tariff, and only on the right tariff. The gap between cheap and dear has to be wide enough to cover what the battery loses on the round trip and what each cycle costs in wear. This page is honest about both sides.

You set the battery to charge in the cheapest import window the tariff offers, usually overnight, and to hold that energy until the expensive window arrives. When the peak rate starts, the site runs off the battery instead of the grid, and the meter sees less import at the dear rate.

The figure that matters is the spread: the peak import rate minus the off-peak import rate. The wider and more reliable that gap, the more each stored unit is worth. A flat or near-flat tariff leaves almost nothing to arbitrage, so the tariff structure decides whether this use case is live before any battery is sized.

Two costs sit between the spread and your return. The first is round-trip loss: a battery returns less than it takes in, so the unit you discharge cost a little more than the off-peak rate you paid for it. The second is degradation: cycling a battery hard to chase a price gap spends its calendar and cycle life faster, and that wear carries a capital cost.

For arbitrage to be worth doing, the spread has to clear both. We do not chase a thin gap that only looks like a saving until the losses and wear are netted off. Where the tariff spread is narrow, the same battery usually earns more on solar self-consumption or on trimming your capacity charge, and we size it for that work instead.

Arbitrage rarely stands alone. The same battery that buys cheap and uses dear also stores your own solar, trims peak demand, and can hold a reserve for an outage. The control strategy decides, half-hour by half-hour, which job earns the most at that moment, so the asset is not left idle waiting for one window.

We model your half-hourly import data and your tariff against a battery sized from an on-site survey, then set the dispatch so arbitrage runs only when the spread genuinely clears the losses and wear. The result is a schedule built on your own meter readings rather than a generic charge-cheap rule.

Arbitrage is an economic case, so it reads capital-first. The battery is a capital purchase, and its return is the spread captured across its life, net of round-trip losses and the wear each cycle adds. A wider, more dependable tariff gap shortens the payback; a thin one stretches it.

The tax side carries a real caveat. The capital-allowances treatment of standalone battery storage is not settled in public HMRC guidance, so we do not state an allowance you can bank on. We set out the qualitative case and the assumptions behind it, and point you to your accountant or tax adviser to confirm the position for your business before you commit.

The off-peak and peak rates you arbitrage against are not arbitrary. They trace back to the half-hourly wholesale electricity price, which moves through the day as demand and the available generation mix change. Your supplier builds a time-of-use tariff on top of that wholesale shape, adds network and policy costs, and offers you fixed bands such as an overnight off-peak window. The British market settles electricity in half-hourly periods under the Balancing and Settlement Code administered by Elexon, and the move to Market-wide Half Hourly Settlement, an Ofgem-led reform, is pushing more non-domestic meters onto genuine half-hourly settlement. The practical effect for you is that the windows are a commercial product your supplier defines, and they can be renegotiated at contract renewal, which is exactly why we model arbitrage against your actual tariff and not a market average. We will not quote you a spread in pence; the gap is yours to confirm with your supplier, and it can move when your contract does. Some suppliers also offer dynamic or wholesale-tracking tariffs whose half-hourly price follows the market in near real time, which widens the arbitrage opportunity but also passes the price risk to you, so the dispatch has to be set to act only when the gap is genuinely there.

Every stored unit comes back smaller than it went in, and that loss is the first thing the spread has to clear. Round-trip efficiency is a measurable, declared property of a battery system, defined and tested under IEC 62933-2-1, the international standard for electrical-energy-storage system performance. It folds together the cell, the battery management system and the inverter conversion at both charge and discharge, plus any standby draw while the energy is held. A figure measured to that standard at one power level and temperature can differ from the figure you see in everyday cycling, so we read the declared efficiency from the current datasheet for the specific product and treat it as the starting assumption, then test the economics against it rather than against an optimistic round number. The honest position is simple: if the supplier's peak-to-off-peak gap does not comfortably exceed the round-trip loss before wear is even counted, the trade does not stand, and we will tell you so. You can see how that nets out on our battery ROI page, and the underlying system cost is set out on our battery storage costs page.

Arbitrage is, by design, a high-cycle use. To capture the spread you charge and discharge the battery hard, often a full cycle a day or more, and that is the most demanding duty a stationary battery does behind the meter. Every commercial battery is sold with a performance warranty that defines a maximum throughput, usually expressed as a cycle count or an energy-throughput limit and an end-of-life retained-capacity point, alongside the cells' own safety certification to IEC 62619, the standard for industrial lithium battery safety. Run a battery past the warranted throughput chasing a thin gap and you can spend the warranty faster than the arbitrage earns, which is a poor trade. So we size the battery and set the dispatch to keep arbitrage cycling inside the maker's warranted envelope, reading the current warranty terms for the specific product before contract. Lithium iron phosphate, the chemistry we lead with for stationary storage, is favoured here for its longer cycle life as much as its safety, and our LFP versus NMC page explains why that matters for a battery cycled daily. The control logic itself, deciding when to charge and when to hold, is set by the energy management system covered on our EMS software page, and the battery is sized for the duty on our battery sizing page.

Because an honest arbitrage return is a model, not a promise, and it depends on inputs only you and your supplier hold. The spread you capture is the supplier's peak-to-off-peak gap, net of the round-trip loss and the cycle wear, multiplied by the units you can shift on a typical day and the days the gap is wide enough to bother. Change the tariff at renewal, change the wholesale shape, or change how often the windows actually clear the losses, and the number moves. Any payback, spread or saving we show you is modelled from your own half-hourly import data and your tariff against a battery sized from an on-site survey, with the basis disclosed, and it is market-dependent rather than guaranteed. That is the same discipline we apply to the variable income from grid services, which can stack on top of arbitrage but is never the reason to buy. As with any figure here, the tax treatment of standalone storage is unsettled in public HMRC guidance, so confirm the capital-allowance position with your accountant before you commit, and read the modelled return alongside the assumptions behind it rather than as a fixed promise.