Meaning
Financial analysis of energy storage systems includes all expenses from initial procurement and shipping to the final decommissioning after the service life ends.
Input Variables
Accurate results depend on the inclusion of shipping costs, import duties and inland freight to the final installation site. Landed cycle cost modeling also incorporates the efficiency losses during each charge and discharge cycle. Maintenance labor and the cost of replacement modules are factored in to create a complete picture of the long term expenditure.
Sensitivity Analysis
Investors run different scenarios to see how changes in electricity prices or discount rates affect the final calculation. Landed cycle cost modeling reveals whether a cheaper battery with a shorter life is less expensive than a premium option over twenty years. This analysis often highlights that the lowest purchase price does not always lead to the lowest cost per delivered kilowatt hour.
Total expenditure assessments shift the focus from capital outlay to the actual cost of energy delivery.
Strategic Planning
Utilities use these models to decide which storage technology fits the specific needs of their grid. For a system intended for frequent cycling the durability of the cell becomes the dominant factor in the landed cycle cost modeling outcome. For backup applications with infrequent use the initial capital expenditure carries more weight.
