Commercial and industrial property owners can earn an annual payment to lease unused parking, yard or outparcel space to a battery developer. The developer pays for, builds and runs the battery, and earns its revenue by stacking several grid programs. Capacity payments form the steady base of the stack, and demand response, energy arbitrage and grid services add revenue on top.
The property owner puts up no capital and collects fixed rent, typically for 20 to 25 years. Battery ground lease payments range from $40k to $100k depending on how much revenue a developer can stack at a site, the more rent that site can support.
Owners who occupy their own buildings have a second option, which is to own the battery outright and keep the full battery value stack. That stack includes savings on their own utility bill, and in the strongest states it can be worth roughly $150 to $400 per kW of battery per year.
Most commercial and industrial properties have a corner nobody thinks about, whether it’s the far end of a parking field, a gravel yard behind a distribution center or an outparcel that never found a tenant. These are the corners battery storage systems are made for monetizing.
What is battery hosting?
Battery hosting means leasing a patch of unused ground at your property to a developer who installs and operates a battery on it. The contract is a ground lease, the same basic structure owners already use for cell towers and outparcel pads, and the developer carries the cost and risk of the equipment.
Why are battery developers paying to use commercial property?
The US grid is sized for its busiest few hours and sits partly idle the rest of the time. On our podcast, Voltus president Matthew Plante estimated that the US transmission grid is in use about 60% of the time and the distribution network about 40%.
Utilities and grid operators pay for anything that takes pressure off the grid during those peak hours. For years before batteries were economical, utilities paid businesses to reduce energy use when the grid called. A battery does the same job by discharging stored power, so companies aren’t restricted to adjusting operations to benefit.
These capacity payments are higher than they’ve ever been. In PJM, the grid operator covering much of the Mid-Atlantic and Midwest, capacity prices rose from $28.92 to $329.17 per MW-day across two auctions. PJM’s last three capacity auctions all cleared at the price cap, and the 2028/29 auction would have cleared at $555 per MW-day without the cap.
In MISO, the grid operator covering much of the central US, Plante said capacity prices have climbed from about $500 per MW-year to as much as $90,000. Voltus expects the payments it makes to customers per megawatt in 2027 to be three times what it paid three years earlier.
The need for capacity isn’t going away. U.S. peak demand is projected to grow by 166 GW by 2030, much of it from data centers, and new large loads are waiting 2 to 3 years or more for utility service. Plante described a data center developer in Missouri that asked Voltus for 100 MW of flexible capacity so it could connect to the grid sooner. Voltus assembled that capacity in 4 months from existing commercial and industrial customers, and the data center developer funded the payments.
Batteries have also become much cheaper. Lithium-ion battery pack prices have fallen 93% since 2010, to $108 per kWh (BNEF), and battery storage kept its full federal investment tax credit through 2033 while other technologies lost theirs. Plante said the payback on a commercial battery has dropped from about 8 years to about 3.5 years with today’s long-term contracts.
Asked which energy technology he’d be, Plante picked a battery, because “the cost of installing me is going down and the value of me is going up.” Fair enough.
The batteries that earn the most sit inside congested local grids close to where power gets used. Grid-connected sites in those networks are scarce, since only about 13% of the capacity that requested a grid connection between 2000 and 2020 ever reached operation (Lawrence Berkeley National Laboratory).
How does a battery on leased land make money?
A battery on leased land makes money through stacking revenue from several grid programs with the same battery. A developer rarely builds a battery for capacity payments alone, because capacity payments by themselves usually won’t cover the cost of the equipment and a 25-year lease.
Capacity payments are the base of the stack: A capacity payment pays a battery to be available. Grid operators such as PJM and ISO New England run auctions that set a price per megawatt, and the battery earns that price for committing to discharge when the grid is stressed. Capacity payments are the most predictable layer, which is why developers and their lenders build the rest of the stack on top of them.
Demand response pays a battery to perform: When a utility or grid operator calls a demand response event during a peak or an emergency, the battery discharges and earns a payment tied to what it delivers in those hours. The same battery that’s committed for capacity can usually be enrolled in demand response too, so it earns a standing payment for being ready and an event payment when it’s called.
Energy arbitrage earns the daily spread: The battery charges when power is cheap, sometimes at negative prices, and discharges when prices spike. Congested grid locations have bigger price spikes, which is one reason developers want sites inside them.
Grid services are the upside: Batteries can sell second-by-second frequency regulation and voltage support to keep the grid stable. These markets fill up quickly as more batteries come online (in Texas, battery revenue from these services has fallen about 90% from its 2023 peak), so most developers treat them as a bonus.
Example: In New York City, under Con Edison’s value stack compensation, a battery of 5 MW or less can earn a capacity value of about $141 per kW-year plus a demand reduction value of up to about $199 per kW-year in constrained networks, paid for delivering power during the utility’s local peak hours. Add community credits and a 5 MW battery in New York City can gross more than $1.5 million a year.
Stacking has rules
Programs generally won’t pay twice for the same megawatt in the same hour, and some programs exclude batteries already committed elsewhere, so part of a developer’s job is choosing the combination that pays most at each site. Texas is the clearest example of a thin stack, since ERCOT has no capacity market and merchant battery revenue there fell from about $193 per kW-year in 2023 to about $29 in 2025.
How are battery hosting deals structured?
Battery hosting deals on commercial property usually follow one of 3 structures.
Front-of-the-meter grid services: In a front-of-the-meter deal, the battery connects directly to the grid and stacks capacity payments, demand response, energy arbitrage and grid services, and the developer controls it. The property owner earns ground lease rent, and tenants aren’t affected.
Behind-the-meter, or bring your own capacity: In a bring-your-own-capacity deal, the battery helps a large new load such as a data center or a power-hungry tenant connect to the grid faster. When the grid isn’t constrained, the tenant can draw on the battery to cut its own energy costs. The property owner earns rent, and the tenant gets a cost offset that helps with retention.
Distributed compute: In a distributed compute deal, a small edge data center is paired with a battery, rooftop solar and sometimes a gas generator where a gas hookup exists. The property owner can earn lease revenue and sell power to the data center.
Typical battery ground lease terms run along these lines.
- An option or development period of 18 to 24 months, often extendable
- An operating term of 20 to 25 years, plus extensions
- Annual rent escalators of about 1.5% to 2.5%
- Fixed rent (revenue share is rare at this scale)
- The developer carries interconnection costs, permitting, insurance and taxes on the equipment, and posts decommissioning security
What is the battery value stack for owner-occupiers?
The battery value stack for an owner-occupier is every source of savings and revenue a battery can earn when it sits behind the facility’s own utility meter. A company that owns and occupies its building pays the utility bill and controls the load, so it can capture savings that a leased, grid-connected battery never sees.
Demand charge savings: Demand charges bill a facility for its highest 15 or 30 minutes of use each month, and they make up 30% to 70% of many commercial bills. A battery discharges during those spikes so the facility’s peak, and its bill, comes down.
Peak tag management: In PJM, a facility’s usage during the grid’s five highest summer hours sets its capacity charge for the following year. Cutting load in those hours is worth roughly $98 to $122 per kW-year across PJM at current prices and about $170 per kW-year in the BGE zone in Maryland, with transmission charges adding about $30 to $60 more. New York City’s equivalent is worth more than $200 per kW-year. Texas has a similar 4-peak system worth about $67 per kW-year, though Texas regulators are reforming it.
Energy arbitrage and time-of-use shifting: The battery charges overnight or midday when rates are low and powers the facility when rates are highest. California’s large time-of-use spreads make this layer especially strong there.
Utility and state performance programs: Some states pay directly for battery performance. Massachusetts’ ConnectedSolutions program pays commercial batteries $200 per kW each summer, and Connecticut pays small and medium commercial batteries $325 per kW-year for the first 5 years.
Demand response and virtual power plant payments: An aggregator enrolls the battery in demand response programs and pays the facility when the battery discharges during grid events. All-in demand response and virtual power plant revenue for commercial batteries typically runs $50 to $200 per kW-year.
Wholesale grid services: Where market rules allow, a facility’s battery can also sell frequency regulation and similar services through an aggregator. It’s best treated as upside.
Backup power: A battery can keep critical equipment running through an outage, which has real value for cold storage, food processing and any operation where downtime is expensive.
The federal tax credit: Owner-occupiers who buy the battery can claim the federal investment tax credit for storage, which stays at full value through 2033.
Stacked together in the strongest states, these layers are worth roughly $150 to $400 per kW of battery per year. The right stack depends on the facility’s load profile. A factory running flat around the clock has little room to cut demand charges but often large peak tags, while an office or retail building with spiky load gets more from demand charges.
Multi-tenant buildings are harder. When tenants have their own utility meters, the landlord usually can’t capture whole-building demand charge savings or demand response, which is one reason hosting a developer’s battery is often the simpler path for landlords.
Which properties work for battery hosting?
Battery hosting works best on ground-level space like parking lots and outparcels. Rooftops rarely work, because fire codes make large rooftop batteries impractical (New York City, for example, restricts rooftop battery systems over 400 kWh to noncombustible construction with fire-rated supports).
Industrial properties usually have the easiest path to battery hosting, with bigger yards, heavier electrical service and zoning that often allows batteries by right. Retail centers make up for smaller footprints with location, since many sit inside the congested urban grids where hosting capacity is scarcest.
State programs shape the opportunity too. New York, New Jersey, Maryland, Illinois and Massachusetts all have active battery storage procurements or programs, and Maryland is procuring 150 MW of distribution-connected storage specifically. Some of New York’s highest-value grid networks have had interconnection holds, which is one more reason every site needs screening.
Most properties in a portfolio won’t qualify. In a recent VECKTA portfolio screen for a retail real estate owner, 187 properties narrowed to 25 that met the initial criteria. Of those 25, 6 were worth a site visit after VECKTA applied filters for available space, setbacks, utility and grid market, local battery bans or moratoriums, flood zone status, fire code (NFPA 855) and permitting.
What should owners negotiate before signing a battery ground lease?
Most optioned battery sites never get built: Because so few projects in interconnection queues reach operation, property owners should negotiate real option payments, short option windows and milestones that trigger rent increases.
A battery ground lease locks up the parcel for decades: A 25-year lease is the biggest hidden cost for an owner with plans to redevelop or densify. Some developers would rather buy the land outright, which removes that flexibility permanently.
Lenders and insurers get a say: Long ground leases usually need lender consent, and insurers covering neighboring buildings will ask about fire separation and setbacks.
Owners who sign early get better economics: Each new battery that comes online makes the next battery’s grid flexibility worth a little less, the same way midday solar in California lost value as more of it got built, so the owners who move first lock in today’s rents.
How to get started with battery hosting
The best starting point for battery hosting is to assess the whole portfolio. Battery developers pay more, and compete harder, when they’re offered a group of pre-screened parcels than when they find a single site on their own.
For property owners, VECKTA screens real estate portfolios for battery hosting, filters out the sites that won’t work, and runs a competitive process so battery developers bid against each other for the ones that will. For owner-occupiers, VECKTA models the full battery value stack at each facility and runs a competitive process for the battery itself. If you’ve got parking lots, yards or outparcels sitting idle, talk to our team about what they could be earning.
Frequently asked questions
Can I lease unused land at my facility for battery storage? Yes. Battery developers sign ground leases for unused parking areas, yards and outparcels at commercial and industrial properties. The developer pays for, builds and operates the battery, and the property owner earns rent, typically for 20 to 25 years.
Can a battery earn from both capacity payments and demand response? Yes, and most do. Capacity payments pay the battery to stay available, and demand response pays it when it actually discharges during a grid event. Developers stack the two with energy arbitrage and grid services, within program rules that prevent being paid twice for the same megawatt in the same hour.
What is the battery value stack? The battery value stack is the full set of savings and revenue a battery can earn at once. For a developer’s grid-connected battery, it’s capacity payments, demand response, energy arbitrage and grid services. For an owner-occupier’s battery, it adds demand charge savings, peak tag management, utility incentive programs, backup power and the federal tax credit.
How much do battery developers pay to lease land? Battery ground leases on rural and suburban land typically pay $1,500 to $5,000 per acre per year. Sites in congested urban grids can earn six-figure annual rents, with a 5 MW battery paying $100,000 to $150,000 a year in some New York metro markets.
Can batteries be installed on a roof? Usually not at the scale battery developers want. Fire codes restrict large rooftop battery systems, so most hosted batteries go on ground-level pads in parking lots, yards or outparcels.
