Fixed payment vs. revenue-share: Which BESS model fits an industrial company best?

When an industrial company considers an industrial BESS installation (Battery Energy Storage System), the decision is not only about technology and price. It is also about how money will flow afterwards. Two models appear often: a revenue-share model, where the customer takes a share of market revenues but also carries the uncertainty, and a fixed contractual availability payment, where the customer receives a predictable payment in exchange for giving up part of the possible upside.

This article explains the difference between the two models, why many CFOs and boards lean toward predictability, and why we at ZynexGroup, by default, take the market risk in our standard model. The purpose is not to sell a particular model, but to make the difference clear so that a financial decision can be made on an informed basis.

Where the revenue comes from

Both models rest on the same fact: a battery's value comes largely from its flexibility, that is, the ability to shift energy and respond quickly when the grid needs it. That flexibility can be turned into revenue across several markets.

In Denmark, the transmission system operator Energinet continuously buys so-called system services (ancillary services) to keep the power system in balance. These include reserves such as aFRR (automatic Frequency Restoration Reserve) and mFRR (manual Frequency Restoration Reserve), which Energinet procures through auctions in the bidding zones DK1 and DK2 (Denmark's two price areas, roughly west and east of the Great Belt). A battery can also earn from energy arbitrage: buying power when it is cheap and selling it, or avoiding consumption, when it is expensive. The spot price is set hour by hour for each price area and fluctuates with factors such as wind, solar, and bottlenecks in the grid.

The point is that revenue from these markets is not fixed. It is variable and exposed to competition. That is exactly the condition the two models handle differently.

Revenue-share: a share of the revenue, but also of the uncertainty

In a revenue-share model, the customer and the operator split the plant's market revenues according to an agreed sharing key. When the market is strong, the customer can receive more than under a fixed payment. When the market is weak, the customer receives less.

The advantage is that the customer gains access to the full market upside in periods when prices are high. The disadvantage is that the customer also takes on market risk, and that risk is real. Analysis from the Danish Energy Agency (Energistyrelsen) describes battery earnings potential as subject to substantial uncertainty, and notes that earnings from balancing services may decline as competition increases. System service prices in eastern Denmark have been high, but the market has quickly become more or less saturated, and an analysis from the Danish Energy Agency indicates that many batteries in the system can reduce one another's earnings on the reserve markets.

The swings are not only theoretical. In the US ERCOT market, average battery revenue fell sharply in 2025 compared with the record year 2023, among other reasons because more batteries entered the market and volatility declined. That market differs from Denmark's, but the mechanism is the same: market revenues can swing considerably from year to year.

A revenue-share model can therefore deliver more in some periods and less in others. It fits best for a company that understands power-market dynamics, can carry fluctuating revenues, and deliberately wants exposure to market developments.

Fixed availability payment: less upside, more predictability

In our standard model, the logic is reversed. The customer buys and owns the physical plant and then receives a fixed contractual availability payment as compensation for allowing us to commercially control the plant's flexibility during the agreement period.

The payment is calculated with a simple formula. The monthly payment is the calculation base divided by 72. The calculation base corresponds, as a baseline, to the customer's total purchase price excluding VAT. Two examples, all figures excluding VAT:

• A plant of approximately 792,000 DKK: a fixed payment of approximately 11,000 DKK per month.
• A plant of approximately 1,188,000 DKK: a fixed payment of approximately 16,500 DKK per month.

If the agreement runs for the full period without suspension, reduction, or termination, the customer receives fixed availability payments equal to 100% of the calculation base over 72 months. Mathematically, that corresponds to approximately 16.7% of the calculation base per year, but that figure describes the repayment rate, not an investment return and not a promise of what the market will deliver.

In exchange for predictability, the customer does not receive market upside during the period. If market revenues exceed the fixed payment, the surplus accrues to us. If market revenues fall below the fixed payment, that is, in principle, our problem rather than the customer's, as long as no agreed exception applies. Predictability is therefore not free: the price is that the customer forgoes the full upside in the strong periods.

Why CFOs often prefer predictability

For a finance function, a fixed payment is often easier to work with than variable revenue. There are several reasons for that.

A fixed monthly payment can be entered directly into the budget and a multi-year business case without assuming a particular market level. If the investment needs financing, a lender will typically look at how predictable the revenue is. A contractual payment is easier to model than revenue that swings with the market. The same applies when an investment must be approved by a board or an auditor, where a simple and transparent model often weighs more heavily than a higher but uncertain potential.

This trade-off is not unique to ZynexGroup. Battery business models range from pure market-based models with high risk to contract-based models with more stable cash flows, and intermediate forms exist where a fixed base income is combined with a share of market revenue. In general, battery project revenues often come from several stacked sources with material market risk rather than from one stable, long-term contract. Our fixed model moves that market risk away from the customer.

For a company with lower risk appetite, or where the battery is not core business, it is often precisely the predictability that makes the case decidable.

Why we take the market risk

The central question, then, is why we take on the uncertainty the customer is relieved of. The answer is straightforward, and we consider it a strength to state it directly:

ZynexGroup takes the market risk because our earnings depend on our ability to optimise the plant better than the fixed payment we have committed to toward the customer.

This is not a gesture. It is a business model in which the two parties receive different things. The customer gets predictability and owns the physical asset. We get the right to optimise the plant's flexibility commercially during the period and retain the net revenues that sit above the customer's payment. Our profit therefore lies in the difference between what the plant can earn in the market and what we have promised the customer.

The model rests on an expectation that the need for flexibility in the power system will grow. Energinet assesses that the need for balancing and system services will rise toward 2040, with aFRR and mFRR as the main sources of that rising need. But the same source emphasises that the expectations are based on estimates and should be used with caution. We therefore do not promise a particular market development. We take the ordinary market risk, and through the fixed payment the customer is protected against ordinary swings in market revenues.

What the fixed payment does not cover

The predictability in the fixed model covers ordinary market swings. It is not an absolute guarantee under all conditions, and it is important to be precise about that.

Ordinary swings in market prices, reserve prices, and volatility do not change the customer's fixed payment. Extraordinary circumstances can, however, affect the agreement proportionally according to the specific contract terms. That applies, for example, to force majeure, binding changes in law, authority orders, electricity-grid collapse, or cyberattacks on critical infrastructure, where it may become illegal, technically impossible, or unsafe to operate the plant as assumed. The payment can also be reduced or suspended if the plant cannot be used for commercial optimisation because of circumstances for which the customer bears the risk, for example lack of access, technical interventions, or missing insurance cover.

That does not change the model's basic principle, but it is worth understanding: a fixed contractual payment is not the same as an unconditional payment. It is predictable within the framework the contract sets out.

ZynexGroup's approach to plant assessment

We offer the fixed model by default because it simplifies operations for both parties and makes the economics simple to understand. Revenue-share is not part of our standard offering. It can in individual cases be agreed specifically, but it is not a model we market or expect to use as the norm.

When we assess a plant, we look at the company's grid connection, consumption profile, and the markets the plant can realistically participate in. On that basis we determine an appropriate size and a calculation base from which the fixed availability payment is derived. The customer owns the physical plant under the agreed payment and transfer terms, while software logic, algorithms, trading strategies, and optimisation models are not transferred. We also offer an actual 6-year payback guarantee on BESS plants as part of the fixed model.

Overall perspective

The choice between fixed payment and revenue-share is, at root, a choice about who should carry the market risk. Revenue-share gives the customer a share of market revenues and therefore both upside and uncertainty. The fixed availability payment gives the customer a predictable payment and ownership of the asset in exchange for giving up the full upside during the agreement period.

Market revenues from flexibility are real, but variable and uncertain, and that is precisely the uncertainty the fixed model moves away from the customer and onto us. For an industrial company that wants to own a physical asset but does not want to handle power-market swings itself, it is often the predictability that makes the investment possible to decide and to finance.

Assessing the potential for your facility

If you are considering whether a BESS plant makes sense for your company, we can have a data-based conversation about it. We typically look at your grid connection, consumption profile, and historical consumption data to make an initial assessment of whether there is a match, and which calculation base a fixed availability payment would rest on if so.

You are welcome to contact us for an informal first conversation.