The Strengths and Weaknesses of Online Storage Modeling Tools

When developers are looking to model a potential solar + storage project, their first step is often to go online to find a storage modeling tool. It’s a reasonable way to begin the process, as long as the customer understands the limits 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 comes when people take the numbers that these online 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 energy storage, and sometimes offer estimates that are far higher or lower than the more realistic modeling process will eventually produce. 

The Value of Online Storage Modeling Tools

There is no denying that these tools are helpful to get a general sense of the value a project offers before moving onto a fuller assessment. They often take less than 10 minutes to run a simulation for a solar + storage project.

That speed is useful in the first step of the sales process. But it’s crucial to remember these tools are only a first step.

Why Aren’t the Results Bankable?

In general, these calculators simply cannot offer accurate estimates for solar + 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 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 monthly billing period, which often creates overestimates of possible savings. When a customer then sees estimates based on modeling done with the real-world controls software that will be deployed, the customer is 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 + storage modeling tools often are not optimized for the real-world because they are not fully capable of co-optimizing between value streams. They are often too focused on demand charge management (DCM), missing out on energy arbitrage (EA) savings.

  • Ignoring the importance of grid services such as Demand Response and Coincident Peak programs. Grid services earnings are extremely market specific and require extensive knowledge of each program, and online tools typically do not include these value streams. In some regions, DR revenues can be up to 75% of the total value created by energy storage, but that is not reflected in the estimates these tools provide.

  • Incapable of modeling complex value streams: Many other value streams are left out from the calculations, often because they’re too complex for simple modeling. Real-time pricing and storage-specific rates with daily demand charges can both a make a significant financial difference. 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 energy storage system provides even more savings by shaving the peaks and reducing demand.

Use the Tools, But Know Their Limits

In the end, it’s important to remember that these third-party storage modeling tools are just a simulation tool meant only for preliminary estimates. They cannot be used to get financing on a deal or offer a performance guarantee to a customer. Projects should be modeled using the same controls software that will control the energy storage system on-site. 

Always consult with an established DERMS provider like Enel X for a more detailed and accurate analysis when a project idea becomes serious.