Quick answer
A finance director will usually check the annual saving and payback first. Be ready to show the actual bills, tariff and half-hourly data behind the figures, where each saving comes from, the full project cost and what happens if savings or trading income are lower than expected.
Finance directors usually go straight to the section on expected annual savings in any commercial battery proposal. They will usually ask three things.
- Which invoices, tariff and half-hourly meter data you used to calculate the annual saving
- Which charges on the bill the client pays less for because of battery operation
- How much of the annual saving depends on export income or trading income, especially if the client does not yet have a written export rate or trading contract
After that, expect them to challenge the full project cost and ask what happens if the battery saves less than you’ve forecast.
Make sure that before you send the proposal, you check that you can explain the annual saving, installation cost, export rate, trading assumption and a downside case, and point to the document behind each one.
Where they will test the saving
Expect the finance director to start with the payback and work backwards.
They may ask these questions.
- Which MPANs and months have you used in the model?
- How closely do the modelled electricity costs match the bills the client actually paid?
- Which charges on the bill does the client pay less for because of battery operation?
- Have you counted the same solar or battery saving twice?
- Does the export rate come from a written supplier offer?
- Is trading income shown before or after fees?
- Have you used usable capacity or the battery’s nameplate figure in the model?
Use the client’s actual tariff, invoices and checked half-hourly data in your proposal.
Don’t use a blended rate because it mixes charges the client may pay less for after battery operation with charges the client will still pay. That can overstate the annual saving because one average rate may include standing charges, time-band unit rates and demand charges that battery operation does not reduce.
In fact, Ofgem’s business energy guidance separates unit rates from standing charges, so do not roll them into one average rate when you model the saving.
Keep bill savings, export income and trading income on separate lines in your proposal and model.
Under P415, a Virtual Trading Party can register an eligible battery in the GB wholesale market. That only shows the Virtual Trading Party can register the battery for that market route. It does not show how often the Virtual Trading Party will trade using that battery or how much income the client will receive.
The finance director will normally want to see a version of the figures with no trading income included as well. If the payback only reaches the client’s target when you include trading income, show the payback with and without that income.
What they will expect to see in the price
The battery and PCS are only part of the project price.
Include these costs in your proposal:
- PCS or inverter
- controller, meter and CTs
- switchgear and cabling
- civils and enclosure work
- fire and ventilation measures
- DNO and professional fees
- commissioning
- annual software, maintenance and trading charges
If the DNO, civils or switchgear cost is still only an allowance, explain that it is an estimated amount and may change. Do not present it as a fixed price.
The finance director may also ask whether the annual saving will still be the same after a few years. Show the usable kWh, efficiency, reserve, warranty limits and expected capacity loss. Do not repeat the first-year saving across the full payback period if the battery will have less usable capacity later.
The payback period will usually be the first figure they check. They may then ask for NPV, IRR and year-by-year cash flow using their own discount rate. Be ready to rerun the figures for these scenarios.
- A smaller tariff spread
- Less peak reduction
- No trading income
- A higher installation cost
- A later commissioning date
In GridVolt’s simulator, you can show bill savings, savings from battery scheduling and trading income separately, then rerun the proposal with lower savings, no trading income or a higher installation cost.
Before you send the proposal, check that you can point to the document or data behind the annual saving, export rate, trading income, installation cost, warranty assumption and payback.
Related questions
Can I use a blended electricity rate to model commercial battery savings?
How do I stop my model double-counting battery savings?
Is quoted battery trading revenue gross or net of fees and revenue share?