Battery revenue forecasting (BESS modelling)

Cornwall Insight Australia’s ‘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 in-house ‘Storage investment model’ (SIM) to forecast BESS revenue across wholesales and FCAS markets. The SIM incorporates a real-world understanding of markets and physical real-time operation of storage assets and 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)

The SIM model simulates the dispatch of a battery storage asset trading across wholesale energy and FCAS markets in the National Electricity Market (NEM).

There are a number of complex interactions and assumptions that can affect how the storage asset trades across the relevant markets. We work with our customers to make assumptions and determine pragmatic and realistic assumptions to ensure revenue forecasts are robust. Some of these elements include:

  • Battery physical limitations, including warranty, capacity, duration, round-trip efficiency (as applicable), asset life, degradation, 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 spreads, charging and discharging patterns, prioritisation of markets (including minimising curtailment), application of network services agreement or SIPS structures, as well as complex PPA structures that may impact trading parameters, amongst others.

Model outputs:

  • Revenues summarised on a monthly basis over the 20-year asset operation:
    • Wholesale electricity revenues for battery storage
    • Wholesale electricity costs to charge
    • Ancillary Services – split into the 8 FCAS markets
    • All outputs will be delivered in $/month, $/MW/h and $/MW

Case studies

Below we have set out several recent projects we have worked on in similar areas to the project scope:

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 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.