Batteries are playing an ever-increasing role in our energy system. But how much income can a battery system actually generate? What are the risks? How does competition affect the business case? What should you pay attention to when signing a contract with a party putting your battery on the market? And what are the possibilities and limitations when combining a wind or solar farm with a battery? These are all relevant questions for (future) battery owners. A Revenue Assessment can provide answers.
Battery Revenue Assessment
Pondera has extensive experience in modelling wind and solar farms to support asset owners in establishing their business case. Therefore, we have expanded our services to include a Battery Revenue Assessment (BRA). The BRA is a valuable starting point when preparing a business case and can also be used for due diligence purposes.
A BRA is aimed at analysing the revenue a battery storage system could generate based on backcasting and market analysis. Pondera has developed a model to calculate the revenue of a battery based on segments of the electricity market open to batteries. The model also determines the impact that local assets, such as solar and wind farms, have on the earning potential if the battery system has to share a grid connection. The submarkets included in the model are: FCR, aFRR, passive imbalance, Day-Ahead and Intraday. Therefore, we combine the markets in which the Balance Responsible Parties and the Balancing Service Providers operate. We also provide insights into the realm of congestion management, which increasingly needs to be taken into account in an energy storage business case. To manage grid congestion, a dedicated market place exists in which Congestion Service Providers play a vital role.
A battery will often share its grid connection with a wind or solar farm, which has its own PPA and priority on the grid. The battery can then use the remaining grid capacity, which varies over time depending on actual solar and wind supply. It is therefore necessary for the BRA to determine time series for solar and wind supply and include these in the backcasting model. Pondera also specialises in generating these specific time series, such as those based on a Wind Resource Assessment.
Investment and maintenance costs are initially not included in the BRA. In principle, energy losses occurring in the battery and coupled AC/DC conversion are factored in, as are variable (network) costs. For determining losses, a modelling approach is initially used, which can be adjusted when further specifications are available.