Energy transfer has been identified as an important process in ternary organic solar cells. Here, we develop kinetic Monte Carlo (KMC) models to assess the impact of energy transfer in ternary and binary bulk heterojunction systems. We used fluorescence and absorption spectroscopy to determine the energy disorder and Förster radii for poly(3-hexylthiophene-2,5-diyl), [6,6]-phenyl-C61-butyric acid methyl ester, 4-bis[4-(N,N-diisobutylamino)-2,6-dihydroxyphenyl]squaraine (DIBSq), and poly(2,5-thiophene-alt-4,9-bis(2-hexyldecyl)-4,9-dihydrodithieno[3,2-c:3′,2′-h][1,5]naphthyridine-5,10-dione). Heterogeneous energy transfer is found to be crucial in the exciton dissociation process of both binary and ternary organic semiconductor systems. Circumstances favoring energy transfer across interfaces allow relaxation of the electronic energy level requirements, meaning that a cascade structure is not required for efficient ternary organic solar cells. We explain how energy transfer can be exploited to eliminate additional energy losses in ternary bulk heterojunction solar cells, thus increasing their open-circuit voltage without loss in short-circuit current. In particular, we show that it is important that the DIBSq is located at the electron donor-acceptor interface; otherwise charge carriers will be trapped in the DIBSq domain or excitons in the DIBSq domains will not be able to dissociate efficiently at an interface. KMC modeling shows that only small amounts of DIBSq (<5% by weight) are needed to achieve substantial performance improvements due to long-range energy transfer.