Storage and LCOE – Edward Bodmer – Project and Corporate Finance

This page includes a comprehensive case study of computing the LCOE of battery storage in diffiernt use cases with PPA contracts. The comprehensive case study includes analysis of hourly solar, wind and demand along with different demand profiles. The use cases include the cost of batteries for ancillary services, load shifting and peaker replacement. Details of battery characteristics — battery cost, battery lifespan, battery O&M, battery round trip efficiency and battery minimum state of charge are used to develop the levelised cost in different use cases. The different use cases are presented with hourly analysis using different potential weather periods (e.g. rainy days, windy days, sunny days, hot days etc.). With the economics of storage reviewed, the case moves to analysis of PPA contracts. Example PPA contracts are presented to evaluate risk allocation, pricing mechanisms, capacity calculations and liquidated damanges. The button below includes slides that I use for a course and the outline for the course.

PDF File with Outline for Course on Project Finance and Economic Analysis of Renewable Energy, Storage and Hydrogen

To introduce things I have included an example of a financial model that I found. This model includes solar and batteries and so you can see what it is like to work through and actual model.

Excel File with Model Structure and Equations with Monthly and Semi-Annual Timing Etc..

Levelised Cost Analysis with Hourly Solar and Storage

In presenting the case studies and financial analyst reports I include a few different excel files with LCOE and hourly analysis; and selected PPA contracts and some additional power point slides. The file attached to the button below includes the power point slides that work through the different issues. You can look through the slides and get an idea of how the various concepts are used in PPA contracts. I have provided an overview of the case and course in the video below the button with the power point slides.

Introductory files for credit and structuring analysis are shown below and the course will focus on develop a sensible structure of debt for renewable energy analysis as well as credit analysis once the debt is structured.

Allow download of excel files when the pink ribbon appears

Integrated Mini-grid Model with Hourly Solar, Battery and Thermal Analysis and Detailed Replacement Calculations

Excel File with Hourly Solar Analysis, Battery LCOE and Financial Model with Risk Analysis - Complete

Example of Hourly Solar Model - Financial Model with Risk Analysis to Evaluate - Exercise

Power Point Slides for Detailed Renewable Energy Analysis with LCOE, PPA, Storage and Hourly Dispatch Analysis

Hydrogen LCOH and Hydrogen Financial Model

The slides and the powerpoint slides attached to the buttons below illustrate issues associated with computing the cost of green versus grey hydrogen. I have purposely made the analysis provactive with a very low cost hydrogen electrolyzer from a Chinese supplier. I suggest that from an economic perspective the idea of combining solar and wind to bring electricity to the hydrogen.

Power Point Slides Describing Financial Model for Hydrogen Using Renewable Energy and Natural Gas

The files below includes a hydrogen financial model that includes detailed a detailed hydrogen financial model and a levelized cost of hydrogen analysis. You can decide which is more valuable for different kinds of analysis.

Excel File with Financial Model for Hydrogen Using Wind and Solar Power Compared to Natural Gas

Excel File with Levelised Cost Analysis for Hydrogen Using Wind and Solar Power Compared to Natural Gas

Generic Macro File for Copying to Right (SHIFT, CNTL, R), Formatting (CNTL, ALT, C) and Other Functions (UDFs)

Example of Analysis of Solar Project with Independent Engineer and Sensitivity Analysis

PDF File with Term Sheet for Loan Agreement that Illustrates Various Financial Structuring Items

Power Point Slides with Case Study of Orsted Case Demonstrating Valuation Principles and Development Risk

PDF File with Output from PVSYST Including Calcualtion of P90 and Performance Rationn Components

Section 1: Hourly Solar and Wind; Fundamentals of LCOE and Drivers; Battery Use Case for Large On-Peak and Off-Peak Differential

Excel files for this first section include downloading hourly loads over multiple years; hourly loads with solar and wind simulation; simple LCOE calculations and a use case for a mine in Africa. The excel files associated with the first section are attached to the buttons below. The file attached to the first button is a simple download of hourly data over years from 2005 to 2023 that you can use to evaluate annual variability in solar, wind and temperature. In the second video below the the button, I demonstrate how you can use the SUMIF function and working with dates to evaluate variability over time.

Excel File with Blank Download of Hourly Data for Multiple Years Used as Basis for Graphing Summary Data

The second file is a file that includes relatively simple solar production and a more detailed wind production analysis. This file uses LOOKUP to compare the production of Solar and Wind in different days and hours.

Excel File with Hourly Data for One Year with Simple Computation of Solar Production and Computation of Wind Production

The third file is the LCOE file that demonstrates you can compute the LCOE with some simple drivers. It also demonstrates that the LCOE analysis conforms to a financial model. The simple model also demonstrates how you can combine batteries with solar to evaluate combined LCOE. In this file you can see how to add a battery to solar projects with additional storage for charging the battery. This analysis illustrates how the LCOE reconciles to the NPV of revenues divided by the NPV of generation.

Excel File with Various Levelised Cost of Electricity Examples Including Batter Plus Solar Analysis for Use Cases

The fourth file is a use case for Batteries of a mine in Africa. This example demonstrates how you can create hourly analysis with charging and discharging to evaluate charging during off-peak periods and discharging during on-peak periods. The case demonstrates the falisy of combining different use cases and imagining that you can receive revenues from different uses.

Excel File with Use Case for Mine with Large Difference between Peak Prices and Off-Peak Prices with Hourly Analysis

Section 2: Excel Files with Sources of Battery Characteristics and LCOE details of Putting together Solar and Storage for Analysis

The second section addresses battery characteristics. Many of the files in this section come from various financial model assumptions. I have provided one of the financial models from Qcells below. You can try and work through this case and create your model from the assumptions.

Excel File with Inputs for Battery Analysis that is Basis for Case Exercise to Create Financial Model

Financial Model Demonstrating How a Price of Two Cents per kWh is Reasonable for a Solar Project

Section 3: Detailed LCOE Calculations in More Complex Use Cases with Peaker Analysis, Ancillary Service Cost Evaluation, Load Shifting Analysis

The third section works through more detailed use cases using the LCOE tool. This includes comparing the LCOE of batteries and peaker plants; the cost of adding batteries for ancillary services; and attempting to use batteries to convert renewable energy to base load. The file attached to the button below is used for comparing renewable to thermal alternatives.

Database of Commodity Prices that Reads from World Bank PinkData and Adjusts for Inflation with Flexible Graphs

Section 4: Hourly Analysis in Detailed Use Cases to Evaluate the Amount of Storage and Renewable Energy to Meet Different Objectives

The file attached to the button below extends the above hourly analysis to include more detailed analysis. The more detailed analysis includes detailed computation of the performance ratio and components of the temperature adjustment as well as other loss factors and the effect of the size of the inverter that defines the AC to DC Ratio. The file also includes calculation of battery storage with different assumptions that include the minimum state of charge and losses from the round trip efficiency.

Excel File with Detailed Hourly Analysis with Solar Performance Ratio and Battery Analysis with Minimum SOC and RTE

Section 5: PPA Contracts for Storage

The discussion of PPA concepts uses three examples that are public or disguised. The PPA contracts are capacity based contracts where the revenue does not depend on the amount of discharged capacity since the discharge is determined by the PPA buyer and not the seller (the investor). The PPA contracts raise risk allocation issues. The three PPA contracts include:

PDF File with PPA Example Number 1 with Solar plus Battery with Example Numbers for Prices and Other Terms

PDF File with PPA Example Number 2 - Entergy Template PPA with Battery and Solar for BOT

PDF File with PPA Example Number 3 - India PPA Terms that were Included in Request for Proposal