Britain’s battery storage pipeline continues to pivot toward contractual structures that prioritize operational control over outright asset ownership, as Drax Group enters a 10 year tolling agreement tied to Fidra Energy’s 250 MW 500 MWh West Burton C battery project.
Under the agreement, Drax will assume full operational control and dispatch rights for the West Burton battery energy storage system in exchange for a fixed annual tolling fee. In return, Drax captures all operational revenues generated by the asset, excluding Capacity Market payments, while Fidra remains responsible for construction, maintenance, and asset availability throughout the contract term. The BESS is planned to enter commercial operation in 2028, subject to a final investment decision expected by the third quarter.
At 250 MW with a two hour duration, the project sits squarely within the size range increasingly favored by system operators for managing short term flexibility, intraday balancing, and price volatility driven by renewable generation. UK National Grid ESO data has shown rising frequency response and balancing needs as wind and solar penetration increases, making large scale batteries an increasingly central tool rather than a marginal flexibility option.
The tolling structure itself highlights how risk is being redistributed across the battery value chain. By paying a fixed fee, Drax effectively takes on market risk tied to power price spreads, ancillary service revenues, and trading performance. Fidra, by contrast, focuses on delivery and technical performance risk. This separation mirrors arrangements long used in gas peaking and LNG infrastructure, now increasingly applied to grid scale batteries as revenue stacking becomes more complex and harder to underwrite through merchant exposure alone.
For Drax, the agreement aligns with its stated ambition to build a gigawatt scale battery pipeline under its FlexGen business. Rather than relying solely on owned assets, tolling allows the company to scale dispatchable capacity faster while leveraging its trading and optimization capabilities. This strategy has been reinforced by Drax’s recent agreement to acquire Flexitricity, a flexible energy asset optimizer with an established presence in UK balancing and ancillary markets.
However, the exclusion of Capacity Market revenues from the tolling arrangement is notable. Capacity payments have historically provided a stabilizing income stream for UK storage assets, particularly during early years of operation. By leaving these revenues with Fidra, the agreement implicitly assumes that wholesale arbitrage, balancing services, and ancillary markets will remain sufficiently liquid and volatile to justify the tolling fee over a decade. That assumption carries risk as market reforms, including changes to ancillary service procurement and battery de-rating factors, continue to evolve.
While commercial operations are targeted for 2028, the contract remains contingent on a final investment decision and commissioning by the second half of 2029.
