Several originators have asked us about the units for BESS toll pricing and how to convert $/kW-month to $/MWh.

For context, BESS tolls are typically priced in $/kW-month. You can think of the contract sort of like a rental agreement in which the offtaker is paying a monthly rate to be able to operate the project and monetize as they see best.

Here’s a way to think about converting $/kW-month to $/MWh:

Say the toll price is $10/kW-month…

$10/kW-month = $10,000/MW-month

Let’s say it’s a 100 MW BESS project…

$10,000/MW-month * 100 MW = $1,000,000/month

That’s $12,000,000/year…

Let’s say the battery can cycle twice in a day, or 200 MWh/day. That’s 200MWh/day * 365 days = 73,000 MWh/year.

So, $12,000,000 / 73,000 MWh = $164/MWh.In summary, $10/kW-month = $164/MWh.

Practically, however, projects will likely not cycle more than 365 times per year.