Help CenterA key element of a BESS operator's job is to schedule charging and discharging in order to capitalize on the highest and lowest priced hours each day. Different operators will make different decisions, so the actual revenue of a BESS asset is invariably subject to the operator’s trading strategy. To account for this variability, RenewaFi models TB2 BESS revenue by considering two scenarios that represent different levels of operators’ skill.
The first scenario is called the Perfect Model. The Perfect Model assumes that the BESS project operator can “perfectly” identify the top two and bottom two hours of each day and therefore maximize the energy arbitrage potential.
In reality, however, no BESS operator is able to achieve the Perfect Revenue model. Most operators are constantly optimizing their predictions, and testing new strategies. The baseline for their strategies, or the barometer of their success, is their ability to outperform what is commonly referred to as Persistent Model. In the Persistent Model, the hourly pricing of the previous day is used to plan charging and discharging for the next day.
Historical Ratio
From 2021-2023, excluding superstorm Uri, the Persistent Model has generated roughly 65% - 75% of the revenue compared to the Perfect Model. This ratio varies at different settlement points, as shown below.
The revenue ratio between the Perfect Model and Persistent Model varies by season as well. In the summer, for example, the ratio is close to 100%, but in the winter it can be lower than half that.
Since RenewaFi’s long-term hourly price forecast uses a monte carlo methodology of random selection, forecasting Persistent Model revenue by looking at a previous day’s top and bottom hours yields unreliable results. To overcome this obstacle, RenewaFi first calculates the Perfect Model revenue, and then uses the historical monthly ratio between Perfect Model and Persistent Model revenue to estimate the Persistent Model revenue in the future.
For example, if the Perfect Model revenue for June 2025 is forecasted to be $10/KW-mo and the historical ratio between Perfect Model and Persistent Model revenue was 89.5%, then the Persistent Model revenue would be $8.95/kW-mo (89.5% * $10/kW-mo).