What this tool does
The check takes a single set of project assumptions for a large C&I or grid-scale battery energy storage system (BESS) that sells into energy markets, and shows three things:
1. The net present value (NPV) of the project at your return hurdle, and whether it clears that hurdle.
2. The investment boundary — the highest turnkey CAPEX (€/kWh) the project can carry and the lowest year-1 revenue (€k/MW/yr) it needs, given all other assumptions held fixed.
3. The assumption that breaks the case first — which single input, when stressed, moves NPV the most.
It is a first-pass screening tool, not a dispatch-based revenue study and not a lender-grade model.
Scope of the model
Pre-tax. No corporate tax, no depreciation or tax shields are modelled.
Unlevered. The project is assumed to be 100% equity financed; no debt service is subtracted.
Nominal euros. All amounts are in nominal EUR. Inflation is not modelled explicitly; escalation and decline inputs are expressed as nominal rates.
Deterministic. The model uses point estimates. Uncertainty is explored through the NPV grid and the tornado chart rather than Monte Carlo simulation.
Input definitions
Asset
Power (MW) — the AC nameplate power of the system.
Duration (h) — the storage energy capacity expressed in hours at nameplate power. Usable energy (kWh) = Power × Duration × 1,000.
Availability (%) — the share of the year the asset is available to earn revenue. Applied linearly to revenue.
Project life (years) — the number of operating years over which cash flows are modelled (investment year is year 0).
Costs
Turnkey CAPEX (€/kWh) — total installed cost of the battery system per kWh of usable energy. Battery cost = CAPEX × usable kWh.
Grid connection (€m) — one-off grid connection cost, incurred in year 0.
OPEX incl. service contract (€k/MW/yr) — annual operating expenditure including a service contract, per MW, in year 1.
OPEX escalation (%/yr) — nominal annual growth rate applied to OPEX.
Augmentation in year (yr) — the operating year in which a one-off augmentation spend occurs.
Augmentation cost (% CAPEX) — the augmentation spend expressed as a percentage of the initial battery CAPEX, incurred in the augmentation year.
Revenue and return
Year-1 revenue at full availability (€k/MW/yr) — revenue in year 1 per MW assuming 100% availability.
Revenue decline (%/yr) — nominal annual decline applied to revenue (e.g. from market saturation or degradation).
Return hurdle (%) — the discount rate used for NPV and the target return the project must clear.
Cash-flow and valuation mechanics
Year 0 cash flow = −(battery CAPEX + grid connection).
For each operating year t = 1 … life:
– Revenue = year-1 revenue × power × availability × (1 − decline)^(t−1).
– OPEX = year-1 OPEX × power × (1 + escalation)^(t−1).
– Augmentation spend is added in the augmentation year only.
NPV = sum of cash flows discounted at the hurdle.
IRR is solved by bisection over the cash-flow series; it is shown as “n/a” when no real root exists in the search range.
Investment boundary
Because NPV is linear in CAPEX and linear in revenue (all other inputs held fixed), each boundary solves exactly:
Highest CAPEX you can carry = the CAPEX value at which NPV crosses zero, solved from the slope of NPV against CAPEX.
Lowest year-1 revenue you need = the revenue value at which NPV crosses zero, solved from the slope of NPV against revenue.
The CAPEX boundary and the CAPEX bar in the tornado chart vary the battery CAPEX only, with grid connection held fixed; the rows of the NPV grid scale both battery CAPEX and grid connection.
NPV grid
The grid shows NPV (€m) at the hurdle for CAPEX between 60% and 110% of your input and revenue between 80% and 130% of your input. The dark line marks where NPV changes sign; the dashed cell is your current case. This shows how far the case is from turning negative in either direction.
Tornado chart
Seven one-at-a-time sensitivities are computed (revenue ±10%, CAPEX ±10%, availability ±2 points, revenue decline ±1 point, hurdle ±1 point, OPEX ±20%, project life ±3 years). Each bar shows the change in NPV from the base case; the longest bar is the assumption to test hardest in due diligence.
Limitations
No tax, no debt, no inflation, no degradation beyond the revenue decline input.
No dispatch or price-capture modelling; revenue is a single flat year-1 figure with a decline rate.
Augmentation is a single one-off spend in one year, not a recurring schedule.
Cash flows are discounted at the end of each year; the investment in year 0 is not discounted.
No residual value, decommissioning or end-of-life recycling cost is modelled.
The example values are illustrative, not market data. The check does not replace a dispatch-based revenue study or lender due diligence, and is not investment advice.
Disclosure
Besscare is published by Besscare OÜ, which shares its founder with BessRe.
