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.
In presenting the case study on Jamica I include some power point slides; a few different excel files with LCOE and hourly analysis; and selected PPA contracts. 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. Contents for the case study which is for Jamica include the following. The power point slides have six different sections. I have provided an overview of the case and course in the video below the button with the power point slides.
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Section 1: Hourly Solar and Wind; Fundamentals of LCOE and Drivers; Battery Use Case for Large On-Peak and Off-Peak Differential
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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.
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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.
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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.
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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.
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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.
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Financial Model Demonstrating How a Price of Two Cents per kWh is Reasonable for a Solar Project
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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.
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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.
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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:
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PDF File with PPA Example Number 2 - Entergy Template PPA with Battery and Solar for BOT
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PDF File with PPA Example Number 3 - India PPA Terms that were Included in Request for Proposal
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Section 6: Comprehensive Financial Model
The final section illustrates how you can incorporate demand analysis and different renewable and storage analysis into a financial model.
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The model begins with demand and supply inputs as illustrated below.
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