Q0017
Battery degradation should be modelled year by year as a function of age, temperature and expected dispatch. The financial model must specify whether the project will accept declining usable capacity, augment the battery to maintain a guaranteed level, or change its operating strategy as it ages.
A BESS may meet its required output when new but fail to deliver the same duration or economic value later. Ignoring degradation overstates revenue, understates lifecycle cost and can leave the owner unable to meet contractual or resilience obligations.
#### Two principal forms of degradation
Calendar degradation
Capacity declines with time even when the battery is used lightly. Important influences include:
Cycle degradation
Charging and discharging consume battery life. Important influences include:
Calendar and cycle degradation occur together.
#### Model usable capacity—not nameplate capacity
The owner should forecast:
If a 10 MWh system reaches 70–80% retained capacity, it no longer provides the same duration unless it began oversized or was augmented.
#### Use the intended operating profile
A supplier’s generic cycle-life graph is insufficient. The degradation model should reflect:
#### Connect technical degradation to cash flow
The model should show how declining capacity affects:
Degradation is an economic input, not merely an engineering specification.
#### Choose a capacity-maintenance strategy
Accept declining capacity
Lower initial cost, but falling revenue and capability must be modelled.
Oversize initially
Install additional capacity at the beginning so the system still meets requirements near end of life.
Augment later
Add modules periodically. This reduces initial oversizing but introduces future equipment-price, compatibility, installation and downtime risk.
Operationally adapt
Reduce cycling, change state-of-charge limits or prioritise higher-value services as the battery ages.
DOE storage assessments explicitly include augmentation and replacement because they are necessary to compare technologies and durations on a lifecycle basis. DOE Storage Cost and Performance Assessment
#### Align the warranty with the model
Check whether the warranty is based on:
Sandia’s procurement guidance recommends obtaining degradation curves, cycle-versus-depth-of-discharge data, replacement schedules, environmental assumptions and guaranteed life as a function of total energy delivered. Sandia Energy Storage Procurement Guidance
#### Account for Malaysian operating conditions
High ambient temperature and humidity increase the importance of thermal management, auxiliary consumption, corrosion protection and maintenance. The owner should evaluate performance at the actual site rather than relying only on nominal laboratory conditions.
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