Battery revenue forecasting

Cornwall Insight Australia’s in-house ‘Storage investment model’ (SIM) is designed to inform and assist market participants on storage investments, enabling project optimisation, risk assessment, independent evaluation, and due diligence.

We use our SIM to forecast BESS revenue across wholesale and FCAS markets by simulating the dispatch of the asset for each trading interval. The SIM incorporates a real-world understanding of markets and the physical real-time operation of storage assets. It translates these to complex decision variables to ensure our model delivers realistic and reliable outputs. It runs a linear optimisation algorithm that utilises granular settlement period market price forecasting data from our industry-recognised and widely adopted modelling tools:

  • ‘Benchmark Power Curve’ price forecast (NEM and WEM)
  • ‘FCAS price curves’, forecasting all FCAS markets (NEM and WEM)

Many input variables can affect how a storage asset trades across the relevant markets, with complex interactions and trade-offs required to be considered to maximise the performance and profitability of the asset. Using our extensive market knowledge and experience analysing the behaviour of batteries trading in the energy markets, we work with our customers to determine pragmatic and realistic input assumptions to ensure the revenue forecasts are robust and optimised. Some of these elements include:

  • Battery physical limitations, including storage capacity and duration, round-trip efficiency, asset life, cycling limitations, degradation and warranty conditions, inverter size, connection type (DC or AC), connection limits, co-location with renewable or other dispatchable generation, and any relevant curtailment profiles, etc.
  • Market operation strategy and bidding behaviour: includes minimum arbitrage spreads, charging and discharging patterns, prioritisation of markets (including minimising curtailment), application of network services agreement or SIPS structures, and complex PPA structures that may impact trading parameters, amongst others

Cornwall Insight Australia provides clear and concise outputs summarising the results. As standard, we provide the following:

  • Revenues summarised on an annual basis over the desired modelling period for asset operation (typically 20 years):
    • Wholesale electricity revenues and costs for arbitrage trading
    • Ancillary Services revenues and costs – broken down for each of the 8 FCAS markets
    • Aggregated accounting of energy throughput for charge/discharge operations across energy, Regulation FCAS, and Contingency FCAS
  • Revenues and operation statistics are broken down on a monthly basis, including:
    • Market trading revenues and costs for the wholesale market and all FCAS markets
    • Battery operational performance, including remaining state of charge, average cycling rates and total charge/discharge throughput
    • Average enablement levels and total throughput dispatched when actively dispatching into each market
  • Charts of market revenues and costs by year and battery operational performance
  • We can also provide written reports detailing the underlying drivers of the trends in the forecasts and further insights into the trading behaviours of the asset

Case studies

Below we have set out several recent projects we have worked on that have relied upon our battery revenue forecasting capability:

Co-located battery storage revenue projection (2019-2020): Developed a 15-year revenue projection for a co-located battery and wind asset in Victoria behind the same connection point. The battery traded across all 8 FCAS markets and arbitraged in the wholesale market.
Battery storage registration and operation assessment (2020): Assisted with registration and connection strategy for the development of future projects for an international storage owner and operator. This included providing an in-depth review of current battery operation strategies and an analysis of current policy positions and access arrangements for storage, including registration pathways and market access options.
Storage Market Entry Strategy (2020-2021): Developed a market entry strategy and assessment of the storage market in Australia for an international storage equipment manufacturer, particularly the value and volume of the addressable storage market in Australia and those market segments that are likely to be most valuable for the client.
Scenario development and battery storage revenue forecast (2021): Identified and ran 13 alternative revenue scenarios for a distribution-connected front-of-the-meter storage asset in QLD trading across wholesale arbitrage and FCAS markets for a new market entry developer and operator of storage projects.
Large battery storage project revenue projections (2021): Provided a 20-year revenue forecast for two potentially very large capacity transmission-connected battery storage projects in SA and NSW for a large solar developer.
International investor in storage project (2021): Provided 15-year revenue assessment of battery storage and FCAS revenues for an investor. This also included the development of a project risk register to allow the client to identify those risks in developing storage projects and providing recommendations for mitigation.
System Security Modelling for the Energy Security Board (2021): We are currently undertaking detailed modelling on the impact and system cost of system strength policies in the NEM, which includes building a bespoke system strength modelling framework and analysing the required option to provide system strength at least cost to the NEM on an ongoing basis.
Pumped hydro revenue forecast (2021): Provided a 20+ year revenue forecast for a proposed pumped hydro project in TAS trading across energy and FCAS markets. This included the formulation of six distinct scenarios that explored the impact of different interconnector builds and government legislation.
Large-scale battery due diligence report (2021): Undertook revenue analysis for an investor for four large-scale batteries across the NEM, including an upside analysis to quantify the benefit of contingency events in the NEM. Presented to the board and the investment committee on the revenue analysis, upside and market trends underlying the battery report.
Portfolio investment review and report (2021): Undertook revenue analysis for an international investor for a portfolio of transmission and distribution connection batteries across the NEM. The analysis included an upside review of the impact of 5-min settlement and low probability high-impact events in the NEM.