The Revenue Swap Agreement
A fixed-for-floating financial swap that converts variable battery storage market revenue into a contracted annual payment.
What is a Revenue Swap Agreement
A revenue swap agreement is a financial contract between Basis Energy and a developer of a battery asset, who agree to swap a fixed amount for the difference between that fixed amount and actual market revenues.
In practice, Basis Energy trades the contracted portion of the battery on behalf of the asset owner and pays a fixed amount each period regardless of what the market does.
The result is simple
A battery project with contracted income that banks can lend against, allowing development pipeline to become built infrastructure.
How it Works
The structure is a fixed-for-floating financial swap between Basis Energy and Project Co, documented under an ISDA 2002 Master Agreement with the AFMA Electricity Addendum. The fixed payment obligation is underwritten by investment-grade credit support.
Settlement is quarterly net. If the variable market revenue exceeds the fixed payment in a quarter, Project Co pays the difference. If it falls short, Basis Energy pays Project Co. The full revenue stack across all NEM energy and ancillary services markets is captured within the single agreement.
Tenor is up to 10 years from commercial operations date.
Project Co
Asset owner
Retains 100% asset ownership
Registered with AEMO
Variable revenue cleared by AEMO
Variable market revenue
Energy + FCAS + FPP, all NEM markets
Fixed annual payment
CPI-escalating, settled quarterly net
Basis Energy
Swap counterparty
Prices, dispatches and settles the swap
CAR of True Oak Investments (AFSL 238184)
Investment-grade credit support
Why is it Bankable
The fixed payment obligation under each Revenue Swap Agreement is underwritten by an investment-grade-rated capital partner under an institutional credit support architecture designed to satisfy senior project finance lender requirements.
Senior lenders model debt service coverage ratios against contractually fixed cash flow rather than a stochastic merchant forecast. Senior debt gearing of 70 percent or higher becomes achievable, compared with 40 to 50 percent under merchant assumptions. The pathway to Financial Close compresses materially. For project equity, the combination of contracted revenue and higher gearing materially improves IRR relative to an uncontracted base case, with less variance across price scenarios.
Origination
Basis Energy partners with projects that have reached an advanced stage of development. These projects typically demonstrate strong technical fundamentals and a clear route to grid connection. Mutual NDA, asset due diligence, Vol-OS pricing, indicative term sheet.
Duration
1 to 3 months
Documentation
Long-form Revenue Swap Agreement, Credit Support Annex, and credit support architecture negotiated. Senior lender review.
Duration
3 to 6 months
Construction
Engineering, procurement, construction of the battery asset. No swap cash flows during this period.
Duration
Approximately two years.
Operations
Commercial Operations Date. Revenue Swap Agreement activates. Quarterly net settlement.
Duration
Up to 10 years.
Term expiry
Revenue Swap Agreement reaches contractual end. Asset reverts to merchant operation or considers extension under a new arrangement.
Duration
Single milestone.
Financial Close
Capital Partner mandate binding. Project financing committed. Conditions precedent satisfied. Initial drawdowns commence.
Duration
Single milestone.