Battery Arbitrage Economic Case (Sezibwa)
[!info] Conservative basis: UEDCL Code 10.2 Q3 2026 tariff (666.5 / 562.1 / 429.7 UGX/kWh), real load. No solar and no capex, so weather and PV price do not affect this case.
Headline
The battery NFE already owns can earn a little money with no solar at all, by charging during the cheap off-peak window and discharging through the expensive evening peak. On the real load and the current tariff this saves about 22,000 to 40,000 UGX per month (about 6 to 11 percent of the bill) depending on how much reserve is held for backup. Modest, and smaller than it used to be, because the tariff spread has compressed. Solar is the real story (see Solar Plus Battery Economic Case).
[!warning] The arbitrage margin has roughly halved on the current tariff The old Sept-2025 tariff had a peak-to-off-peak spread of 410 UGX/kWh (753 vs 343). The current Q3 2026 spread is only 237 UGX/kWh (666.5 vs 429.7). After the battery's 90 percent round-trip efficiency, gross arbitrage value falls from roughly 372 to about 189 UGX/kWh — so these numbers are about half the earlier draft's. Do not quote an older 43k-79k figure.
Method
Transparent scoping model on the real load. Battery 8.9 kWh usable, 90 percent round-trip, 12 kW inverter cap (never binding at these levels). Charge off-peak toward full, discharge to cover the evening peak down to a reserve floor. Tariff is a configurable input (Q3 2026 used here).
Results
| Reserve held for backup | Saving per month | Percent of energy bill |
|---|---|---|
| 0 percent (max saving) | about 39,600 | about 11 percent |
| 30 percent | about 29,900 | about 8 percent |
| 50 percent (safe backup) | about 21,700 | about 6 percent |
Investment metrics
No money is invested (the battery is owned), so there is no IRR or payback. The 20-year value of the arbitrage stream, discounted at 15 percent, is about 1.9M UGX (2.6M at 10 percent, 1.3M at 25 percent). It is upside on owned hardware that declines as the battery ages.
It is not quite "free money"
Even with no incremental capex, cycling the battery consumes a slice of its finite life, so there is a real degradation/opportunity cost per kWh cycled. On the compressed current spread that cost is no longer negligible relative to the ~189 UGX/kWh gross margin. The economically correct rule is therefore not "arbitrage whenever there is a price spread" but:
Arbitrage only when the tariff spread is large enough to beat the marginal degradation cost and still leave the required backup reserve.
That makes optimal arbitrage a Microgrid OS control problem (net of losses and degradation, subject to reserve), not a fixed inverter setting.
What it means
- Arbitrage alone saves about 22,000 to 40,000 UGX/month (6 to 11 percent of the bill) on owned hardware, and the margin shrinks further net of degradation.
- The reliability dial is cheap on wear: 50 percent reserve roughly halves the saving versus 0 percent, but at under one cycle per day the battery lasts 15 years or more.
- Strategic read: arbitrage is a minor ancillary benefit, not the money story. Solar is (see the Solar Plus Battery Economic Case, where 4 kWp offsets ~55 percent of the bill at ~48 percent IRR).
Battery aging over 20 years
Because this case is entirely battery-dependent, it is the most exposed to aging: with capacity fading to 50 percent by year 20, the 30-percent-reserve saving roughly halves over the horizon. Pairing the battery with solar makes the income far less sensitive to aging.
See also Optimal Solar and Battery Allocation and Battery Price Break-Even.
Caveats
Greedy policy; a forecast-driven, degradation-aware controller would arbitrage less often but more profitably. Ignores the fixed monthly service charge (not offsettable). Treats the battery as arbitrage-dedicated, whereas its real primary role is backup, which is why the reserve tradeoff matters.