Representative investment case · Solar plus storage

The model returned a 10.37% project IRR and 1.57x DSCR. Neither number answered the committee’s hardest question: what exactly was the battery being paid to do?

Felix developed a 120 MW solar PV plus six-hour BESS model and investment-committee case around an 8.8 USc/kWh revenue assumption, US$184m total CAPEX and US$62m equity. The case is representative analytical work, not a live financing or completed mandate.

120 MW solar PVSix-hour BESSUS$184m CAPEX8.8 USc/kWh representative tariff

The decision problem

Storage cannot be valued as extra CAPEX attached to a solar model

The project’s headline metrics were positive, but the committee case depended on assumptions that needed to be visible: charging source, usable energy, round-trip efficiency, dispatch frequency, degradation, augmentation, warranty limits, replacement cost and the contractual service being purchased.

A six-hour duration description says how long the battery can discharge at rated power. It does not prove that the PPA pays for that output, that the plant can charge it economically or that the asset can sustain the assumed duty cycle over the financing tenor.

Analyst note

The BESS should earn value from a defined obligation—energy shifting, firm capacity, peak support, dispatch compliance or grid service. “Renewable integration” is not a revenue line.

What Felix separated in the model

  • Solar generation available for direct sale versus storage charging.
  • Charging losses, discharge losses and auxiliary consumption.
  • Nameplate capacity versus usable capacity after depth-of-discharge limits.
  • Capacity fade, efficiency degradation and augmentation timing.
  • Contracted revenue versus uncontracted operating upside.
  • Battery replacement and reserve funding versus ordinary O&M.

Where the base case was fragile

The project looked strongest where the evidence was weakest

AssumptionWhy it could overstate valueCommittee evidence required
Single blended tariffIt may pay solar energy but not separately compensate storage availability or dispatch.PPA schedule defining paid energy, capacity and performance obligations.
Static battery efficiencyRound-trip and auxiliary losses can change with temperature, load and ageing.OEM performance curves and guaranteed operating envelope.
No explicit augmentation planUsable capacity can fall below contracted duration before debt maturity.Degradation curve, warranty, augmentation quantities, timing and cost.
Unconstrained cyclingRevenue may assume more cycles than warranty or solar charging permits.Hourly dispatch case and cycle-throughput warranty.
Replacement outside CAPEXA future cell or inverter replacement can materially reduce equity cash.Lifecycle replacement schedule and reserve funding mechanism.
Base-case debt headroom1.57x DSCR can fall quickly when output, efficiency or COD is stressed together.Combined downside, not isolated one-variable sensitivities.
The judgement

The committee should not approve the project because the storage improves dispatch in principle. It should approve only when the contract pays for the operating profile that the technical design can sustain.

Downside framework

What was stressed

Tariff
Lower contracted price and delayed escalation.
Solar yield
Less direct energy and less charging energy.
Battery efficiency
Lower discharged MWh and higher internal energy cost.
Availability
Lost dispatch hours and potential performance deductions.
Degradation
Faster capacity fade and earlier augmentation.
CAPEX / COD
Overrun, IDC, delayed revenue and increased equity.
Debt
Higher interest, shorter tenor and reduced sculpting headroom.

How the IC memo was written

The recommendation came before the background

The investment paper was structured around the decision: proceed, pause, reject or proceed subject to conditions. The model output was summarised only after the thesis, material assumptions and evidence gaps were clear.

The recommendation was conditional rather than promotional. The project could justify further diligence, but the storage revenue, dispatch case, warranty alignment and lifecycle cost had to be closed before capital approval.

10.37%Project IRR in the representative base case
1.57xAnalysed DSCR before combined downside
US$62mRepresentative equity requirement
6 hoursDuration requiring an evidenced duty cycle
Disclosure boundary

This is a representative analytical model and investment case. It is not a completed project, regulated recommendation, fairness opinion, lender commitment or evidence of financial close.

Conditions to proceed

Capital approval was tied to evidence, not formatting

Revenue

Define what the offtaker buys

Separate solar energy, stored energy, capacity, availability and dispatch obligations. Link each payment and deduction to a model line.

Required evidenceExecuted PPA schedules
Technical

Prove the battery can perform the contract

Reconcile hourly charging, cycle count, efficiency, temperature, degradation, augmentation and warranty throughput.

Required evidenceIndependent technical report and OEM warranty
Cost

Fund the full lifecycle

Include augmentation, replacement, major maintenance, insurance and contingency rather than relying on initial EPC price.

Required evidenceLifecycle BOQ and reserve schedule
Finance

Size debt on conservative dispatch

Use combined downside to set leverage, repayment, DSRA and distribution lock-up—not the strongest operating year.

Required evidenceLender case and covenant pack

Investment committee support

Need the model and recommendation to challenge each other?

Share the model, technical case, contracts and committee deadline. The output should identify what creates value, what only appears to create value and what must be closed before approval.

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