How to Avoid Losing Money Because of State of Charge Errors

Inaccurate SoC leads to financial penalties from missed dispatches, liquidated damages when contracts are not fulfilled, and poor outcomes and performance in capacity tests. Meanwhile, operating too conservatively to avoid penalties means leaving money on the table. TWAICE’s new feature, Penalty Risk Assessment, gives you the insights needed to avoid these costly outcomes, helping you to identify and address SoC risks before they turn into losses.

What are power deratings and why do they cause financial penalties?

Power derating refers to the reduction in the power a battery energy storage system (BESS) can deliver. This often occurs when individual battery strings shut off when they reach certain SoC or voltage limits, either because they are fully charged or completely depleted. When this happens, the system can no longer meet the inverter set point (the amount of power that should be exported to the grid at a given moment, usually expressed in MW). Inaccurate SoC readings from the BMS or EMS are a key cause of power de-ratings and the resulting penalties.

The specific consequences of power deratings vary from project to project. Here are few real-world examples of the damage SoC errors can cause:

• An energy trading company had to pay more than $85,000 in penalties in just one month, with one single penalty costing nearly $12,000.
• An Australian-based asset owner was fined $525,000 for failing a capacity test due to SoC errors provided by the manufacturer’s BMS.
• A US-based energy trading company experienced daily penalties of 60% of the total daily revenue – meaning a revenue loss of 60% due to SoC errors.
• A US-based asset manager stated: “We do not dare to do more ancillary services in ERCOT because of the penalties we are afraid to run into” – demonstrating how SoC errors mean leaving money on the table.

These examples make one thing clear: SoC errors are always expensive, no matter the business case.

Why SoC errors lead to penalties

Ancillary services

Ancillary service markets are essential for maintaining real-time balance between supply and demand. The consequences of a power shortfall are generally defined by market rules and grid operator requirements and vary by energy market. The most common consequences are financial penalties, and in extreme cases, disqualification of the asset.

A few examples of financial penalties:

• UK: Failure to meet capacity obligations during a stress event results in penalties. The rate is typically 1/24^th of the relevant auction clearing price, adjusted for inflation (source).
• New England: Resources with a capacity obligation may be fined up to $2,000 per MWh for failing to deliver during shortfalls (source).

Wholesale trading

In wholesale markets, participants agree to deliver a specific amount of energy at a defined time. The required power output during the delivery window is calculated to meet this energy obligation. If your system underdelivers because of an unexpected power drop or early shutdown, penalties may apply. Market rules vary, but typically the gap must be settled at prevailing market prices.

Power purchase agreements (PPAs)

With PPAs, you commit to delivering a certain amount of power or energy. Failure to meet these performance commitments can lead to liquidated damages, as defined in the contract terms.

For example, if your customer contracts a 50 MW battery for capacity and your system only delivers 30 MW at peak due to an outage or insufficient charge, the contract might require you to pay the utility the cost of the 20 MW shortfall.

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The Challenge: Getting Accurate SoC Estimations

An accurate SoC is crucial for avoiding unexpected power deratings as power availability is directly dependent on SoC. Inaccurate SoC estimations can lead the system to believe it is operating safely when it is actually nearing critical thresholds, triggering unexpected power derating.

Due to battery aging, environmental conditions, and complex electrochemical behaviors, maintaining SoC accuracy over the full lifetime of a BESS is challenging, particularly for LFP systems. Traditional battery management systems (BMS) or energy management systems (EMS) often fall short. (Learn more about challenges of SoC estimations with LFP systems here.)

The Solution: Accurate SoC Insights With TWAICE

Inaccurate SoC readings from the BMS or EMS are a key cause of power de-ratings and resulting penalties. TWAICE’s new Penalty Risk Assessment feature uses advanced analytics to assess your systems’ vulnerability to SoC-related deratings and provides actionable recommendations.

Key benefits:

• Avoid power deratings by operating your system in a safe SoC window
• Get visibility into SoC errors and receive actionable guidance to maintain and optimize SoC accuracy
• Identify available charge and discharge power over time to identify BMS and EMS errors

Here's how the Penalty Risk Assessment feature works:

Spot Potential Risks

Penalty Risk Assessment identifies when SoC estimates deviate and put the system at risk of power deratings.

In the example below, the system shows a high risk of penalty because the SoC values reported by the BMS or EMS are inaccurate. This means that the system may be operating outside its safe SoC window. TWAICE provides a recommended safe operating SoC range to minimize risk of penalties. In this case, it’s between 13% (45 MWh) and 63% (275 MWh), i.e., only 50% of the total energy capacity is safely usable under current conditions.

Track periods of high-risk operation

The feature maps daily system-reported SoC against the TWAICE corrected SoC and flags any high-risk operations. The larger the deviation between reported and corrected SoC, the higher the risk of running into a penalty due to unforeseen power deratings. To mitigate risk of power deratings, systems should be operated in the recommended SoC ranges.

Get actionable recommendations

TWAICE doesn’t only flag risks. It breaks down SoC errors by rack or string, showing both charge- and discharge-side deviations. Each one comes with tailored recommendations: For example, “Fix SoC error” means you should run a calibration cycle to recalibrate the BMS SoC. Others might need balancing due to inconsistencies.

How TWAICE Delivers a More Accurate SoC Than a BMS or EMS

EMS and BMS systems typically operate with limited onboard processing power and rely on simplified electrical and empirical models to estimate parameters like State of Charge(SoC). These models often assume ideal conditions and do not fully account for battery degradation, temperature effects or dynamic usage patterns. In contrast, TWAICE processes large volumes of real-world operational data and applies advanced algorithms that continuously adapt to degradation patterns, environmental conditions, and usage variability, resulting in more accurate SoC estimations.

More specifically, SoC challenges arise at both the string and system level for the BMS and EMS. On the string level, flat voltage profiles and voltage imbalances across the cells within the string cause inaccuracies in BMS SoC calculations. On the system level, the EMS SoC is compromised by undetected inactive strings, SoC discrepancies across power conversion systems (PCS) and inherited BMS errors from the string level. Together, these issues compound to unreliable SoC readings when relying solely on BMS or EMS outputs. (Learn more here)

Don’t Let SoC Errors Affect Your Bottom Line

The Penalty Risk Assessment provides vital insights into SoC errors, showing you how they translate into power deratings and provides clear recommendations, helping you to avoid costly penalties.

Curious to find out more? Request a 1:1 demo!

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