Small miscalculations in a battery’s state of charge can add up to real financial losses, according to a new white paper from Powin and Tierra Climate that examines lithium iron phosphate (LFP) battery systems operating in ERCOT.
The report found that for every 1% increase in state of charge estimation error, the usable battery capacity dropped by 1.2%. Operators using arbitrage-heavy market strategies can lose nearly 1% of their total revenue from the batteries for every 1% increase in error.
“When you’re trying to use the full range of the battery, that’s where you can run into problems,” said Powin’s chief transformation officer, Michael Bennett, in a conversation with pv magazine USA. As such, strategies focused on ancillary services experience smaller (but still significant) revenue losses of 0.20% per 1% error.
Such a high level of sensitivity to inaccurate state of charge measurements impacts the financing, sizing and long-term performance of battery projects. Bennett said that LFP batteries have a unique quality that makes it tricky to measure their state of charge: a flat voltage curve across most of the state of charge range.
The flat curve means traditional voltage-based methods struggle to accurately estimate charge.
Energy arbitrage strategies are thus more vulnerable to revenue losses, since they rely on full charge-discharge cycles and narrow margins to hit revenue targets.
The report also said that overestimating state of charge is more financially damaging than underestimating it, particularly for batteries providing ancillary services.
Bennett said that overcommitting an asset can lead to real-time market penalties or forced purchases of replacement energy if your battery can’t pay up.
“If you tell the market operator that you’re going to be able to provide a certain amount of energy… and end up not being able to do that,” he said, “You often have to go buy that energy on the market to fulfill that obligation and then sometimes pay penalties.”
“There are financial ramifications for saying you can do something when you can’t,” he added. Underestimating, on the other hand, gives operators the flexibility to offer extra capacity if conditions allow.
“You let yourself have a little wiggle room,” Bennett said.
As battery energy storage system projects continue scaling and participating in more dynamic market conditions, improving state of charge accuracy is essential to maximize value. The report recommended that operators adopt cell-level data monitoring and invest in more advanced state of charge estimation algorithms. Like state of health, it should be proactively monitored.
“You have to have access to your data, and sometimes get gut checks from third parties or backups,” Bennett said.
Regulators may also play a role in standardizing state of charge accuracy expectations.
“We think we’ll start to see some unification across markets so everybody is on the same playing field,” Bennett said. Without common definitions or metrics for reporting state of charge error, he said, project comparisons, metrics reporting and performance guarantees will stay inconsistent.
For developers, Bennett said that better state of charge estimation could reduce the need to oversize systems, which would lower upfront costs while still preserving operational flexibility.
“People are now starting to wrap their heads around that idea,” he added.
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