RTE Sensitivity: Efficiency vs Allowable Cost

How round-trip efficiency affects the economics of behind-the-meter storage

Main Analysis | Business Case | Test Results
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£ /yr
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£ /kWh

Summary

3 kWh
Selected Unit
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Internal BOM
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Required Sale Price
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Total Savings @85%
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Supplier Cash Flow @85%
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Hurdle IRR
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Annuity Factor (10-yr)

Allowable System Cost vs Round-Trip Efficiency

For each RTE from 75% to 95%, this shows the maximum you could spend on the system while still achieving the hurdle IRR, after paying the customer their guaranteed value. The annotated lines show the selling price and internal BOM cost.

Margin Headroom: Both Units Compared

Allowable cost minus internal BOM cost = the maximum margin you could charge while still delivering the hurdle IRR after the customer's guaranteed value. Both unit sizes are shown simultaneously so you can compare how the cost-per-kWh difference interacts with the RTE sensitivity curve. Where headroom drops to zero, that RTE cannot support any margin at all.

Incremental Allowable Cost per 1% RTE Improvement

Each bar shows how much more you can afford to spend on the system for each additional 1% of round-trip efficiency. This is the key question: does the BOM cost of higher-efficiency components justify the improvement?

Full Results Table

RTE % Total Savings Customer Value Supplier Cash Flow Allowable Cost Sale Price Headroom GP @1k GP @10k GP @100k

Operating State Context

The simulation uses a single effective RTE parameter, but in practice round-trip efficiency decomposes into three distinct operating states, each with different loss mechanisms:

Active Discharge

95-98%
Inverter conversion losses dominate. At 800W output, a good inverter operates near peak efficiency. Losses are primarily switching and transformer losses in the DC-AC conversion stage.

Active Charge

92-96%
AC-DC rectification plus battery charging losses. BMS cell balancing, charge controller overhead, and coulombic inefficiency in the cells contribute. LFP cells have excellent charge acceptance (~99%).

Sleep / Standby

2-10W parasitic
BMS monitoring, WiFi/cellular connectivity, and standby power draw. Over long idle periods, parasitic losses can significantly erode stored energy. A 5W standby draw loses 120Wh/day - 4% of a 3kWh battery.
Effective vs Component RTE: The effective round-trip efficiency combines charge efficiency x discharge efficiency x standby losses over the typical hold period. A system with 95% charge, 97% discharge, and 2% standby loss has an effective RTE of 0.95 x 0.97 x 0.98 = 90.3%. The sensitivity analysis above sweeps the combined effective parameter, letting you assess the total economic impact regardless of which component drives the loss.

Methodology

For each integer RTE from 75% to 95%:

  1. Run the greedy arbitrage simulation on the last 365 days of Octopus Agile data to get annualised savings at that RTE
  2. Subtract the customer's guaranteed annual value to get supplier cash flow
  3. Compute the annuity factor: AF = ∑(1/(1+r)t) for t=1..10, where r = hurdle IRR
  4. Allowable cost = supplier cash flow x AF (the maximum capital cost that delivers the hurdle IRR)
  5. Margin headroom = allowable cost − internal BOM cost
  6. Incremental cost = difference in allowable cost between adjacent RTE values

Key assumptions: 10-year battery life, constant annual savings (no degradation), greedy median-threshold strategy, 0.8kW base consumption, 1kW charge rate. Internal BOM = £100 inverter + £35/kWh storage.