Energy Storage Business Model Design

energy storage application evaluation

Designing effective and profitable energy storage Use Cases requires hands-on operational experience with technology and in energy markets. This is where Fractal has the winning advantage. Our design and financial engineering expertise will ensure your energy storage project is an economic investment.
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Fractal has extensive, hands-on experience in battery energy storage. Although energy storage systems can simultaneously perform different functions ("stacked services"), many of these services are not considered relevant or cost-effective in developing a business case for a client. Fractal will analyze and identify relevant applications specific to you based on the following criteria:


End-User & Ownership Model Interconnection Location
Dispatch & Duration Requirements Performance Parameters
Market Rules, Qualification and Registration Regulatory Considerations
Total Lifetime Costs Global Assumptions

application analysis

Fractal analyses over twenty energy storage applications according to your specific variables, using metrics such as Net Present Value (NPV) and Benefit-to-Cost (B/C) analysis. Prior to stacking service it is essential to identify the technical and economic potential, and compatibility of each application.
Fast Regulation
Non-Spinning Reserves
Traditional Regulation
Responsive Reserves
Ramp Support
Time of Use (TOU)
Real Time Arbitrage
Outage Mitigation
Firming
Smoothing
Shaping
Black Start
Voltage Support
VAR Support
Power Factor
T&D Deferral
Load Shifting (Arbitrage)
Resource Adequacy (Capacity)
Demand Charge Mitigation
Emergency Response Services
Demand Response
Uninterrupted Power Supply
Congestion Relief
Production Cost Reduction
Transmission Fee Mitigation
Line Loss Redution
Operating Reserves
Reliability / Contingency
Generation Deferral
Renewable Integration
Emission Reduction

Compatibility Assessment

energy_storage_application_compatibility

Fractal determines application compatibility based on:

Primary Application Selection Flexibility of Applications
Point of Interconnection Asset Registration (GR, LR, CLR, DG)
Duration Requirement Commitment Periods
Duty Cycle SOC and C Rate

Fractal will identify, investigate and analyze any current or forecasted operational concerns and infrastructure investments. Our objective is to design business models that earn direct revenues, enable cost savings, increase reliability and whenever possible, address existing operational and planning issues.

design economical use cases

Fractal combines compatible energy storage applications into use cases where B/C > 1 and preliminary financial analysis is performed. Prior to analysis, Fractal constructs an hourly duty cycle to account for the dispatch, operations and control of the asset. Primary service and secondary services are considered in addition to flexibility, grid timing and roundtrip efficiency costs.

Use Case design include:

Primary Service Selection
Secondary Service Selection
Application Flexibility
Hourly Duty Cycle
Operations Optimization

Preliminary Financial Analysis Includes:

Quantify Preliminary Expenses
Estimate Preliminary Revenues
Assess the Preliminary Financial Feasibility
Select Location(s) and System Sizing
Design Business Models

design and analyze business models

Fractal builds custom investor-grade financial models to assess the lifetime value of your energy storage project. Our models take into account the specific technology, design and dispatch of your project. We go beyond manufacturer's datasheets and marketing collateral. Fractal applies real world experience drawing from primary research of behavior and maintenance cycles from years of hands-on energy storage operation. Consistent RFP management allows us to be current on costs and vendor offerings.
Project Life
Capacity Augmentation/Swap
Salvage Value
O&M Cost / Inflation
Tax Incentives / Grants
Debt
Price Escalation
Discount/Hurdle Rate
Depreciation
Degradation
Roundtrip Efficiency Losses
Market Pricing
C Rate and SOC
Battery System/BOP Cost
Each business model is systematically analyzed using different combinations of potential battery sub-chemistry and financing option. The outputs of our financial analysis include costs and measures of financial performance to make investment decisions including:
Total Installed Capital Costs
First Year Financials
Internal Rate of Return (IRR)
Payback Period
Net Present Value (NPV)
Debt
Benefit-to-Cost Ration (B/C)
Finance/Debt/Bond Options
Sub-Chemistry Optimization
System Sizing Optimization
Warranty and Augmentation Schedule
Final Point of Interconnection Economics
Expected Project Schedule

Fractal will optimize each business model with:

Sensitivity Analysis
Risk Assessment
Battery Chemistry Optimization
Environmental Impact Assessment
Emission Reduction Calacutions
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