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By Terry Holtz

Terry joined Enel in 2017 and has held several positions in Solutions Engineering and Product Management. He currently leads the product development of Enel’s pre-sales energy modeling software platform.

When organizations express interest in distributed energy resources (DERs), they often seek quotes for potential solar and battery storage projects. Typically, their first step involves finding a battery storage modeling tool online – sometimes referred to as a calculator. While this is a reasonable approach, it’s important for the prospective customer to understand the limitations of these tools. They provide generally useful preliminary ballpark estimates, but they are not nearly as accurate or bankable as modeling based on the actual controls software that will be deployed in the field, control the system, and deliver the savings.

The danger of relying too heavily on calculator results

There is no denying that these tools are helpful to get a general sense of a project’s value before moving onto a fuller assessment. They often only require a few inputs – such as the facility’s peak demand – and take less than 10 minutes to run a simulation for a solar and battery storage project. That speed is particularly useful in the first step of the sales process. However, it’s crucial to remember that a calculator is simply a first cut at designing and optimizing a solution.

The danger comes when people take the numbers that these modeling tools produce at face value. The calculators are meant only as a very preliminary estimate, great for quick analyses to prescreen project opportunities. But they are not sophisticated enough to capture the full value of battery storage, and they sometimes offer estimates that are far higher or lower than the more realistic modeling process will eventually produce.

Why are these preliminary results not bankable?

In general, these calculators simply cannot offer accurate estimates for solar and battery storage projects, and banks and other investors do not deem the results accurate enough to be used for financing purposes. The estimates can often be significantly higher or lower than the true project value, often by 20% or more, for a variety of different reasons:

• Faulty assumptions: Many simplified assumptions are built into the calculator for the sake of speed, but that speed comes at the price of accuracy. For instance, these tools assume perfect foresight of customer load for an entire month or year , which often creates overestimates of possible savings. When customers then see estimates based on modeling done with the real-world controls software that will be deployed, they are surprised by the lower savings. Or worse, expectations are never adjusted down, and the customer doesn’t realize that the “perfect” forecast they were initially given by the online modeling software can’t be achieved in the real-world, and the project underperforms against their financial expectations.
• Unsophisticated battery dispatch strategies: The battery dispatch strategies built into these online solar and battery storage modeling tools often are not optimized for the real-world because they are not fully capable of co-optimizing between multiple value streams. They are often too focused on demand charge management (DCM), missing out on energy arbitrage (EA) savings and grid service opportunities.
• Overlooking the importance of grid services: While at first pass, on-site energy resources may not appear to be associated with the large-scale generating resources that participate in wholesale energy markets and utility programs, they are nevertheless able to provide grid services that earn additional revenues. It’s not surprising that online calculators overlook this, as grid services earnings are extremely market-specific and require extensive knowledge of each program. This means that in some regions, where grid services revenues can account for up to 75% of the total value of the solution, the online calculators are missing out on a lot of the value provided by DERs’ energy flexibility. However, that is not reflected in the estimates provided by these tools.
• Incapable of identifying other synergies: Online calculators leave out many other potential synergies, like making a tariff switch to get more beneficial rate structure, co-optimizing across multiple technologies like on-site generation, storage, and EV charging, and determining the optimal mix between on-site versus off-site clean energy usage. For instance, most industrial sites in California that are PG&E customers can benefit from switching to Option S, which has daily demand charges instead of monthly. The rate switch itself generates significant savings, and the battery energy storage system provides even more savings by shaving the peaks and reducing demand.

In the end, it’s important to remember that these third-party battery storage modeling tools are just a simulation tool meant only for preliminary estimates. They cannot be used to obtain financing or offer performance guarantees to customers. 

What should you do instead?

For a more detailed and accurate analysis when a project idea becomes serious, work with an experienced energy partner like Enel. At Enel, we model projects using the same controls software that will control the battery energy storage system on-site. As part of our project development process, we offer in-house consultancy services, performed by our team of domain experts who conduct a thorough economic analysis on your behalf to analyze, design, and optimize all aspects of your solar and battery storage projects. Here’s a typical engagement process across the solutions engineer, energy markets teams, and policy teams.

• Solutions engineering: Solutions engineers can help energy users across different industries to optimize their solar and battery storage projects based on their specific needs. Through their expertise, Enel can advise on potential tariff rate switches (like the switch to Option S for energy users in California) to maximize the benefits of the new energy flexibility you’ll unlock with your on-site energy resources.
• Energy markets: Enel’s energy markets team has years of experience being deep in the weeds of wholesale energy markets and utility programs, trailblazing new value streams for our customers. Compared to any other competitor, Enel offers more access to grid services and, in some regions, has exclusive bilateral agreements to aggregate and service demand response.
• Policy team: Through our policy team’s advocacy, Enel is shaping the development of the clean energy regulatory landscape. In Ontario, for example, we are demonstrating the value of on-site energy resources to support the grid. Our team has also been actively involved in providing feedback to the U.S. Department of Treasury on proposed guidance around the Inflation Reduction Act, which will shape how the tax provisions of this landmark legislation are implemented.

Working with Enel means being able to tap into each and every one of these resources, and more. Our expertise in energy, combined with our commitment to collaboration, means that you can trust us to take care of the energy side of your business, while you focus on your core operations. We understand that every organization is unique, which is why we take the time to understand your specific needs and goals for undertaking this huge investment.

Perhaps the biggest testament to our confidence in delivering the savings and values we’ve modeled is our ability to underwrite future value streams. As part of The Enel Group, we’re backed by $150 billion in annual revenue. We will not only model your projected cash flows, but we will also underwrite your market-based and utility program revenue streams, providing you with the peace of mind that you’re covered for the long-run.

Experts weigh in on Enel modeling

DNV GL, an independent testing and energy consulting firm, assessed Enel’s battery storage modeling tools, summarized in DNV GL’s press release. DNV GL found that Enel has developed modeling tools with “industry-leading capabilities” that can “produce reliable and unbiased forecast results.”

The scope of DNV GL’s work focused on the modeling tools Enel uses during its customer engagement process. These tools are used to calculate the economic benefit of a battery energy storage system, or solar and battery storage system, at a customer’s facility. Such tools are far more accurate than third-party online storage modeling tools, which many developers often use as a first step in the modeling process.

After multiple sessions with Enel subject matter experts, primarily discussing the modeling methodology and architecture, DNV GL determined that the conceptual approach and execution of Enel’s optimization model was among the top in the industry.

One of the notable aspects of Enel’s software that DNV GL highlighted lies in its ability to stack “value across demand charge management and demand response while maintaining compliance with applicable incentive programs.” Many providers claim to “value stack,” but may only access a limited number of available programs or opportunities. DNV GL’s nod to Enel’s value-stacking software underscores how important this capability is in order to maximize the economic value of a battery energy storage system.

Richard Barnes, region president, Energy North America at DNV GL – Energy, spoke about the technology, and why customers can rely on Enel’s offering. “Energy storage technologies are a major cornerstone to successfully increasing the penetration of renewables into the generation mix, and tools such as Enel’s storage optimization software ensure that customers can confidently install storage and realize their decarbonization goals and utility bill savings,” Barnes said.

What does this mean for your organization?

Interpreting estimated project cashflows requires a nuanced understanding of the assumptions and uncertainties that underlie these projections. By working with Enel, you gain the benefit of our experience and expertise in the industry, which allows us to provide you with the most accurate and reliable projections possible. Contact us today – our team of experts is here to help you understand your options and help you choose the most suitable energy solution for you.