REVENUE STACKING LEGAL FRAMEWORKS FOR BATTERIES

1. Meaning and Regulatory Context

Revenue stacking refers to a battery energy storage system (“BESS”) earning income from multiple electricity-market services using the same asset. A grid-scale battery may participate in wholesale arbitrage, balancing services, frequency response, reserve products, Capacity Market arrangements, local flexibility procurement and network-support services.

The legal issue is not whether multiple revenue streams are inherently prohibited. Modern electricity regulation increasingly recognises that storage should be capable of supplying several services where technically feasible. EU electricity-market rules expressly provide that active customers with storage should be allowed to provide several services simultaneously and should not face inappropriate double network charging.

In Great Britain, revenue stacking is governed through a combination of the Electricity Act 1989, electricity licences, the Grid Code, Balancing and Settlement Code, Capacity Market Regulations and Rules, procurement contracts and competition law.

2. Core Legal Principle: No Incompatible Double Recovery

Revenue stacking is lawful only where contractual and regulatory obligations are compatible. The same battery capacity cannot normally be committed simultaneously to two services where both require exclusive physical availability during the same period.

Regulators therefore distinguish between legitimate stacking and double remuneration for the same obligation. Capacity must be properly metered, baselined and allocated so that the system operator can verify actual delivery.

The July 2026 Capacity Market Rules continue to provide the detailed operating framework for Capacity Market participation, including prequalification, capacity obligations, metering, testing and secondary trading.

3. Tempus Energy Ltd v European Commission

Case Name/Citation

Tempus Energy Ltd and Tempus Energy Technology Ltd v European Commission, Case T-793/14, EU:T:2018:790.

Facts

Tempus challenged the European Commission's approval of the UK Capacity Market. The scheme remunerated capacity providers for making electricity capacity available or reducing demand during periods of system stress. Tempus argued that the design insufficiently recognised alternative flexibility resources such as demand-side response.

Legal Issue

Whether the Commission had adequately investigated whether the Capacity Market treated different flexibility technologies fairly and whether State-aid approval could be granted without a formal investigation.

Judgment

The General Court annulled the Commission's approval decision, finding that significant doubts should have led to a formal investigation. The Court of Justice later set aside that judgment in Commission v Tempus Energy, Case C-57/19 P.

Legal Principle/Ratio

Capacity-support arrangements must be examined in light of their treatment of competing technologies and the structure of electricity-market participation. State-support mechanisms cannot be assessed without considering whether their design creates unjustified competitive advantages.

Significance

Although Tempus concerned demand-side response rather than batteries specifically, its reasoning is important for storage because batteries similarly combine capacity, balancing and flexibility services.

4. Capacity Market and Battery Revenue

Battery storage can participate in the Capacity Market subject to applicable eligibility, duration, metering and delivery rules. The Government's 2026 reforms expressly sought to improve participation by technologies including battery storage and long-duration electricity storage.

Capacity Market revenue can therefore form one layer of a battery's revenue stack, alongside merchant trading and ancillary services. However, market participants must ensure that other contracts do not prevent them from satisfying Capacity Market stress-event obligations.

5. Network Charging and Double Charging

Storage creates a distinctive legal problem because it consumes electricity when charging and exports electricity when discharging. If both flows are treated exactly like final consumption and conventional generation, the battery may face economically distortive duplication of network charges.

EU legislation therefore requires that certain storage customers should not incur double charges for stored electricity remaining on-site or used to provide flexibility services. This reflects a wider regulatory principle that network tariffs should not unnecessarily discourage storage.

6. Competition and State-Aid Constraints

Where public support, cap-and-floor arrangements, grants or other regulated revenues are combined with merchant revenues, regulators must consider overcompensation and competitive neutrality. For example, in March 2026 the European Commission approved a Romanian State-aid scheme supporting stand-alone battery-storage investment, illustrating that storage subsidies remain subject to formal State-aid control.

The same principle applies to revenue stacking: public support should not produce unjustified double compensation for costs already recovered elsewhere.

7. Conclusion

Revenue stacking is central to the commercial viability of battery storage because one asset can provide several technically distinct electricity services. The legal framework permits such stacking where obligations are compatible, measurable, transparent and non-duplicative. Capacity Market rules, balancing arrangements, network tariffs, State-aid principles and competition law collectively prevent double recovery while allowing batteries to monetise genuine flexibility. The Tempus litigation demonstrates that market design must also avoid unjustified discrimination between competing flexibility technologies.