Batteries earn volatile revenues, but lenders want fixed ones. Financial swaps that trade a fixed payment for floating battery revenue, from day-ahead spreads to full revenue indices, are how that gap is starting to close.
Chris Kennedy, Founder & Managing Director at Miranda Energy, joins Ed Porter in Berlin to explain how battery swaps actually work, where basis risk hides, and why he treats power volatility as an asset class in its own right.
They cover:
- Why basis risk is the most misunderstood part of day-ahead TB swaps, and how round-trip efficiency, degradation schedules, payout caps and availability adjustments bring the swap closer to what the asset really earns.
- How day-ahead swaps are evolving into total revenue swaps benchmarked to broader battery revenue indices like Modo Energy's, and why capturing more of the revenue stack cuts basis risk further.
- Why fixed-for-floating battery swaps borrow the ISDA playbook from interest rate markets, and how a TB swap let a German solar portfolio hedge the duck curve without building a battery.
- Why Chris sees volatility, not the depreciating battery, as the asset to own, and how ten-year TB swaps, credit-light offtakes for BESS SPVs and 245MW of fixed offtakes across Germany, Poland and Hungary set Amaranth Energy apart from the big trading houses.
- Chris's contrarian view: the market puts too much weight on backwardation in the TB forward curve, when spreads may prove directionally persistent as solar continues to outpace flexibility.
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Exploring a battery revenue swap? Talk to our team about using Modo Energy indices in your contracts.
Chapters:
0:00 Intro
1:19 Basis Risk in Day-Ahead Battery Swaps
3:42 Unlimited Liability, Payout Caps and Availability
6:54 Total Revenue Swaps and Battery Revenue Indices
8:21 Battery Offtakes: Profit Shares, Floors and Tolls
9:55 Fixed-for-Floating Swaps and ISDA
11:21 German Solar, Negative Rates and the Duck Curve
13:23 Virtual Battery Hedge for Solar Portfolios
16:48 Three Use Cases for TB Swaps
17:27 Power Volatility as an Asset Class
19:57 Prop Shops vs Trading Houses
22:16 Credit-Light Offtakes for BESS SPVs
23:52 Options, Volga and Exotic Battery Hedges
26:22 Poland, Hungary and Emerging BESS Markets
29:48 Spain and Negative Power Prices
31:44 The Ideal Swap Counterparty
33:31 Contrarian View
