When evaluating battery systems, purchase price is only part of the equation. Total Cost of Ownership reveals the true lifetime cost of each solution. This article outlines the key factors that should be considered in the calculation.
Looking beyond the battery purchase price
When evaluating battery systems for demanding industrial applications, it is tempting to focus primarily on the initial investment cost, or CAPEX (Capital Expenditure). While CAPEX is certainly an important parameter, it represents only a fraction of the actual cost associated with operating a battery system throughout its lifetime.
For mission-critical applications such as construction equipment, mining equipment, port and maritime operations, trucks and industrial energy storage, the real economic performance of a battery system can only be assessed through its Total Cost of Ownership (TCO).
A battery that appears less expensive upfront may ultimately become the more costly option when operational expenses, replacement costs, maintenance requirements, downtime, and productivity impacts are taken into account.
This article outlines the main factors that should be considered by decision-makers when comparing battery solutions from an end-user perspective. These factors are summarized in the table below.
| # | Factor | Key insight |
| 1 | Initial purchase cost | Price per kWh should not be the main criteria to consider for comparing battery solutions. |
| 2 | Expected battery lifetime and replacement costs | Battery lifetime should be assessed under real operating conditions to avoid unplanned prematurely replacement. |
| 3 | Charging and operational flexibility | Fast charging enables opportunity charging, increasing operational flexibility and efficiency. |
| 4 | Energy consumption and efficiency | Battery Energy efficiency has a direct impact on overall energy consumption and costs. |
| 5 | Downtime risks and costs, productivity impacts | Special attention should be paid to battery architecture and thermal management to ensure no performance derating or battery failure, even under harsh climatic and environmental conditions. |
| 6 | Maintenance requirements | Maintenance-free batteries can generate significant cost savings. |
| 7 | Infrastructure requirements and costs | A complete CAPEX evaluation should include all related infrastructure investments, including charging stations, electrical upgrades, additional equipments. |
| 8 | Safety and certifications | A robust and certified battery solution reduces operational risks and associated costs. |
What does TCO include?
Total Cost of Ownership is a comprehensive financial framework that considers all costs incurred throughout the battery system’s lifecycle.
Key elements include:
1. Battery acquisition cost (CAPEX)
Main battery system
The acquisition cost of a battery system depends on several factors, including the battery technology, energy density, power density, expected lifetime and safety features.
One should make sure to consider all these factors when comparing different battery solutions.
Specific care should be given to battery life assessment, since it has a huge impact on TCO and can be greatly reduced depending on use conditions (e.g. life can be divided by 3 to 5 in real life versus laboratory tests)
Note that price per kWh is often incorrectly used to compare battery solutions. This should not be the case, as while it provides a simple indication of the initial acquisition cost relative to energy capacity, it does not reflect the actual value delivered over the battery’s lifetime. Parameters such as cycle life, depth of discharge, efficiency, degradation, and operating conditions have a much greater impact on the total cost of ownership and should therefore be considered when evaluating battery technologies.
Additional battery equipment
For demanding applications, it is important to understand what is included in the system. For example, does the battery require additional equipment to operate in the required climatic conditions? Is an active cooling or heating system included, or does it need to be added separately? Is there a need for an additional protective casing? What are the constraints linked to the battery integration in the equipment (fire protection, ventilation, air treatment…). The answer can significantly impact the initial investment.
Although important, the battery acquisition cost is typically incurred only once and should therefore not dominate the purchasing decision, as explained in the following.
2. Battery lifetime and replacement costs
A lower-cost battery may require replacement significantly earlier than a premium solution.
Factors influencing battery lifetime include:
- Cycle life
- Depth of discharge (DOD)
- Operating temperature
- Charging patterns
- Application profile
If a battery must be replaced once or even multiple times during the equipment lifecycle, the apparent CAPEX advantage quickly disappears.
When evaluating battery systems, it is therefore essential to compare their expected life under real operating conditions rather than relying solely on nominal specifications and lab tests.
3. Ultra-fast charging and operational flexibility
Charging strategy can significantly influence operational efficiency.
Battery systems that require lengthy charging periods may force organizations to redesign work schedules and introduce battery-swapping procedures. In some cases, additional batteries must also be purchased to maintain productivity.
It should be noted that battery swapping systems are generally proprietary and are often limited to a specific manufacturer and, in some cases, a specific equipment model. This can reduce operational flexibility for fleet managers.
Conversely, batteries capable of ultra-fast charging provide greater operational flexibility by enabling opportunity charging during scheduled breaks or short idle periods.
The resulting operational savings can have a substantial impact on the overall economics of the business while simplifying daily operations.
Besides, fast-charging stations typically use standardized charging methods, allowing a single charging station to be used across multiple equipment models and battery systems, thereby enabling infrastructure sharing and reducing overall charging infrastructure costs.
4. Energy costs
Battery technologies can differ significantly in their energy efficiency.
Energy efficiency (round-trip efficiency) is measured as the ratio of energy delivered during discharge (kWh) to the energy used during charging (kWh), expressed as a percentage.
A system with lower round-trip efficiency consumes more electricity to deliver the same usable energy output. Over years of operation, these losses can translate into substantial additional energy expenses, especially for high-utilization applications operating multiple shifts per day.
In hybrid powertrains using diesel engines, these losses will be directly translated into fuel consumption.
Moreover, some battery technologies require more energy to operate properly than others. For instance, a battery that requires a dedicated chiller will consume more energy than one doing the same job using a simple air- or liquid-cooled heat exchanger.
5. Downtime and productivity loss
Perhaps the most underestimated cost factor is the impact of battery performance on productivity.
Several factors can induce productivity losses or even unexpected equipment downtime. These include:
- Long charging periods
- Battery performance derating due to low or high cell temperatures
- Unexpected battery failures due to harsh environment or extreme temperatures
Without proper design and thermal management, batteries operating in harsh climatic and environment conditions may suffer accelerated aging, reduced performance, or, in some cases, complete failure resulting in equipment downtime.
Batteries function best between 15°C and 30°C. Charging is not possible below 0° and above +45°. Safety issues arise at temperature exceeding 60°C. Therefore, one should carefully evaluate how battery technology handles operation in harsh conditions. This largely relies on the battery thermal management system, which must:
- Dissipate the heat generated by high power demands required in highly demanding applications,
- Maintain the battery within its optimal operating temperature range despite ambient temperatures that can be extremely hot or cold, such as those found in mining, ports and maritime applications.
Battery architecture and casing should also be considered to ensure proper protection against dust, rust and vibrations.
For operations running 24/7, the cost of a single hour of downtime can easily exceed the price difference between competing battery technologies. Reliability therefore has a direct economic value.
6. Maintenance Costs
Some battery technologies require regular maintenance activities such as:
- Specific full charge procedure for individual cell balancing
- Preventive service interventions (coolant change for instance)
- If equipped with a battery chiller, the associated maintenance
- Air filters or air treatment systems, for air cooled batteries
These activities increase battery downtime and generate both direct maintenance costs and indirect labor expenses.
Maintenance-free battery technologies often deliver significant savings over the life of the system while simplifying day-to-day operations and improving fleet availability.
7. Initial investment – Infrastructure costs (CAPEX)
CAPEX costs include more than just the battery acquisition cost. Moving to electric may require investments to upgrade the existing electrical infrastructure, such as charging stations or extra power supply requirements. A complete CAPEX evaluation should include all these associated infrastructure and implementation costs. Here are the most common:
Charging stations
Quantity required
Depending on the battery charging strategy, electrifying a fleet of equipment may require additional charging stations:
- Slow battery charging, although placing less stress on battery cells, can drastically reduce charger availability for other equipment and require the purchase of supplementary charging stations to maintain equipment or vehicle uptime.
- Conversely, when running a fleet of vehicles, especially in time-critical applications such as ports or mines, faster charging capabilities reduce the number of charging stations required and avoids disrupting the organization of fleet management.
Cost of footprint
For some applications where space is a constraint such as ports or underground mines, each square meter is valuable. Reducing the number of charging stations is a plus as the space saved can be allocated to other activities.
Electrical infrastructure upgrades
Electrification of heavy-duty equipment often necessitates upgrades to the site’s electrical infrastructure. Charging systems, in particular, can create substantial power demand that exceeds the capacity of the existing grid connection. As a result, upgrades to transformers, substations, distribution networks, switchgear, and cabling may be required. These infrastructure costs can represent a significant part of the total electrification investment and should be evaluated early in the project.
Important note: even if counterintuitive, fast charging does not necessarily require more grid power than slow charging. For a fleet operating across three shifts, the daily energy that must be delivered to the batteries is the same regardless of the charging approach. While fast charging uses higher-power chargers, fewer charging stations may be needed. Conversely, slow charging uses lower-power chargers but generally requires a greater number of charging stations. As a result, when the charging infrastructure is properly designed and managed to avoid excessive simultaneous charging events, the overall grid power requirement is similar.
Additional equipment
Companies should also assess whether additional equipment is required to maintain productivity. If charging times are too long, extra batteries, battery swapping systems (handling, storage…), or additional vehicles may be needed to ensure continuous operation. This additional equipment also requires storage space. The cost of storage should be considered as well.
These costs can significantly increase the actual investment and should be considered from the outset.
8. Certified safety
Safety is a critical component of the total cost of ownership.
Investing in a robust battery solution with advanced monitoring and protection functions can significantly reduce operational risks and associated costs.
Decision-makers should ensure that battery systems comply with the relevant industry standards and certifications, such as:
- Marine type approvals for maritime applications
- Machinery and industrial safety regulations applicable to the target market
- UN ECE R100 for road-going vehicles
- IP protection ratings for environmental resistance
Moreover, selecting a certified battery reduces insurance costs.
Conclusion
Making better investment decisions
For demanding applications, battery selection should never be based solely on CAPEX. The true financial impact of a battery system emerges over years of operation through many factors.
When comparing battery solutions, decision-makers should evaluate:
- Initial purchase cost
- Expected battery lifetime and replacement costs
- Charging and operational flexibility
- Energy consumption and efficiency
- Downtime costs and productivity impact
- Maintenance requirements
- Infrastructure requirements and costs (charging stations, electrical infrastructure upgrades, additional equipment)
- Safety and certifications
Only by considering all these factors and adopting a Total Cost of Ownership approach can organizations identify the solution that will improve operational efficiency, reduce risk, and generate the lowest overall cost throughout the battery’s life cycle.
In battery systems, the cheapest purchase is not always the most economical investment. TCO tells the real story.
A WATTALPS, we can help you calculate the TCO of your project.
for a customized TCO analysis for the hybridization or full electrification of your fleet using WATTALPS batteries.
