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Battery “Arbitrage”: Making Money Charging Cheap, Using at Peak
Arbitrage means charging a battery when power is cheap and using it when power is expensive. How it works, whether it pays, and the honest maths.
WaterFuelAndSolarEnergy.com Editorial Team Updated December 2024 7 min read
Energy arbitrage is charging a battery during cheap off-peak periods and discharging it during expensive peak periods, pocketing the difference. On time-of-use tariffs the gap can be significant — but you must factor in battery efficiency and degradation.
The maths to check
- Peak rate minus off-peak rate = your gross spread
- Batteries are ~90% efficient, so ~10% is lost each cycle
- Account for a share of battery degradation per cycle
- Only cycle the battery if the spread beats those costs
Illustrative arbitrage example
| Input | Value |
|---|---|
| Off-peak rate | $0.10/kWh |
| Peak rate | $0.35/kWh |
| Spread per kWh | $0.25 |
| Efficiency-adjusted | ~$0.22 net (approx) |
Is battery arbitrage worth it?
Only when the peak-to-off-peak spread comfortably exceeds efficiency and degradation costs, and your tariff actually supports it. On many tariffs it adds little — self-consumption is the stronger case.