|| Home|| Book || Featured PF Models || Featured Corp Models || Featured Acq Models || PF Exercises || Corp Exercises || Download to Excel || Scenario Analysis || Tornado Diagrams || Monte Carlo || Flexible Graphs || Real Estate || Acq Exercises || Macros || Reading PDF || Waterfall Graphs || Circular Ref || Depreciation || Financial Ratio || Value Driver || Renewable || Testimony || Pricing Case Studies ||

This page includes analysis of batteries and storage in different contexts. Various files lead up to a comprehensive battery analysis with solar and diesel in the context of an island grid. Issues include how to collect real world data on items including the cost of batteries and other storage, diesel power plants, diesel fuel prices and solar power. The analysis of batteries and storage depend on load shapes and the value of power during different time periods. Part of the analysis therefore involves the timing of loads and merchant prices.

Lesson 1: Analysis of Batteries and Solar for Isolated Systems

I have heard a lot of buzz about batteries lately. Some of this comes from the man who makes so many billions from charging such high fees for Paypal. So I have tried to apply some economic and finance principles to evaluating the cost and benefits of batteries. I try to derive the capital cost of batteries that will have to exist before batteries become economic.

This lesson set discusses my attempted analysis of batteries. I use data from Lazard as base. (At first I did not understand why Lazard computed the cost per kWh instead of cost per kW but now I see that they compute the cost per kW x hours from one charge.) I therefore begin by making a database from the Lazard study which contains costs and some storage characteristics and O&M data for different types of batteries. This uses a lot of read pdf stuff and I have made a video on how you can efficiently read the Lazard study from the internet. I have tried to replicate the Lazard analysis in PJM, NYISO, NEISO, CAISO and ERCOT (but I had some problems, particularly with valuation of regulation services). I have put the data together on batter analysis so you can change carrying charge rates, battery costs (evaluating the break-even battery cost) and fuel costs to test conditions that would make a battery economic.

I evaluate the value of batteries in a hypothetical island situation. An island example is good for examining the fundamental way things work (even in macro economics when thinking about an Robinson Crusoe investment, consumption and implied interest rates). If people on the island want power during the night, they must have some kind of back-up. One strategy is to supplement diesel plants that have really expensive fuel and O&M from running diesel plants with solar projects. If you are going to make this analysis you better have good data on the capital cost, heat rate, diesel cost and the operating costs of a diesel plant. Therefore, the second part of the solar analysis therefore walks through sources and analysis for diesel inculding forward markets for diesel fuel, conversions of USD per gallon to USD per MMBTU. I also show how to find capital costs from sources other than places like Lazard or EIA which seem to have very general data.

Once the battery cost data and the diesel data is established, the battery analysis requires careful analysis of load profiles. Take three extreme examples. In one case people on the island only use electricity (perhaps for air conditioning) when the sun is shining. Here the solar power is perfectly correlated with the usage of electricity. Batteries would be useless here. In the second case, people only use electricity at night. Here, supplementing the solar power with diesel would not help and you would need a battery to save the power during the day for use at night. The number of panels correspond to the capacity and not the storage of power. The storage of power corresponds to the power needed at night. Sizing the panels and the batteries to get the power and then produce it can be tricky. The final extreme case is one where there is a flat load. Here the solar power for batteries must compete with used for things like a refrigirator. Therefore, the second set of videos walks through analysis of individual load profiles and solar power profiles.

The final videos put everything together. This demonstrates load profiles, battery costs, diesel fuel costs and solar capacity factors that make batteries economic. These videos show how to present scenario data in an effective manner and how to show break-even cases in a careful way. As with other lessons, I am making a set of questions for each video so you can receive a badge and you name on a special page of this website.

Videos associated with Lesson Set 1: Battery and Solar Analysis

The battery, solar and diesel analysis combines a whole bunch of analytical techniques that are discussed on other pages of the website. It includes techniques to put together a database; methods of converting PDF files; approaches for reading data from the internet to make assumptions about diesel prices; comprehensive methods for developing carrying charge assumptions that involve financial modelling; measuring the cost of solar power from different sources; developing patterns of solar power; integrating demand curves; computing LCOE and other issues. A video that describes the end of the process is available below. Links to other videos that walk through each of the steps are included in the table below the final video.


Video Link

Introduction to Battery Analysis

Creating Battery Database with Read PDF File

Futures Price of Diesel Fuel

Carrying Charge Introduction

Carrying Charges and Inflation

Taxes in Carrying Charge Rates

Periodic Analysis in Carrying Charges

Completed Carrying Charge Analysis

Creating Electricity Cost Database

Analysis of Electricity Cost Database

LCOE Analysis

Solar Cost Analysis

Solar vs Diesel Economic Analysis

Battery Selection Analysis and Database

Battery Analysis and Merchant Prices

Final Battery Analysis


Files associated with Lesson Set 1: Battery and Solar Analysis

The first spreadsheet below attempts to replicate the Lazard study where snapshots were presented for different ISO's in the U.S. I attempt to back into various things like energy for charging, energy for discharge, total capital and demand charges. One area of difficulty I had in understanding the results was the issue of payments for regulation. For example, for the PJM region, the study has a regulation value of USD 40/MWH that is inflated at 2.5%. This USD 40/MWH compares to merchant on-peak prices that have been slightly above USD 30/MWH for the past couple of years. Reconciliation of how battery cycles are modelled, how the energy for storage, efficiency and the energy for discharge are is pretty straightforward. The file also includes replication of degradation assumptions and demand charges.

The second file contains a spreadsheet with all of the data from Lazard on the capital costs, operating costs, storage and efficiency for different types of batteries. It mainly comes from the Lazard study where I read the data from a pdf file into an excel file using new techniques I have developed to straighten out the titles. The database can be sorted by type of project, type of storage device, cost range or capacity amount.

The third file is the most important with analysis of various combinations of solar, diesel and batteries in an island scenario. This file demonstrates the value of batteries using different assumptions with respect to solar irradiation, hourly demand usage, solar capacity installation, solar capacity price, diesel fuel price, carrying charges that depend on a host of factors including return on equity, cost of debt, inflation, taxes, plant life, construction period, replacement and other factors. The file is name solar diesel and battery.xlsm.

Lesson 2: Comparative Renewable Energy Analysis

The second lesson on this page covers analysis where you can compare the costs of different renewable and dispatchable electricity technologies. Various different files related to comparative analysis of renewable energy costs are shown below. This analysis demonstrates that the project financing terms for renewable analysis are very important in evaluating the costs. The group of files are excel models for various types of projects. The next set of files include selected power point slides that describe renewable technologies, resource assessment and financing of renewable technologies. Subsequent files include various template models for different kinds of renewable projects.

Files associated with Lesson Set 2: Comparative Renewable Energy Analysis

Renewable Course Slides

Current version of Renewable Energy Slides