Your browser does not support JavaScript!
http://iet.metastore.ingenta.com
1887

access icon openaccess Maximising the investment returns of a grid-connected battery considering degradation cost

Energy storage systems (ESSs) are being deployed widely due to numerous benefits including operational flexibility, high ramping capability, and decreasing costs. This study investigates the economic benefits provided by battery ESSs when they are deployed for market-related applications, considering the battery degradation cost. A comprehensive investment planning framework is presented, which estimates the maximum revenue that the ESS can generate over its lifetime and provides the necessary tools to investors for aiding the decision making process regarding an ESS project. The applications chosen for this study are energy arbitrage and frequency regulation. Lithium-ion batteries are considered due to their wide popularity arising from high efficiency, high energy density, and declining costs. A new degradation cost model based on energy throughput and cycle count is developed for Lithium-ion batteries participating in electricity markets. The lifetime revenue of ESS is calculated considering battery degradation and a cost–benefit analysis is performed to provide investors with an estimate of the net present value, return on investment and payback period. The effect of considering the degradation cost on the estimated revenue is also studied. The proposed approach is demonstrated on the IEEE Reliability Test System and historical data from PJM Interconnection.

References

    1. 1)
      • 4. Walawalkar, R., Apt, J., Mancini, R.: ‘Economics of electric energy storage for energy arbitrage and regulation in new york’, Energy Policy, 2007, 35, (4), pp. 25582568. Available at http://www.sciencedirect.com/science/article/pii/S0301421506003545.
    2. 2)
      • 10. Eyer, J., Corey, G.: ‘Energy storage for the electricity grid: benefits and market potential assessment guide’, vol. 20 (Sandia National Laboratories, USA, 2010), p. p 5.
    3. 3)
      • 29. Ahmadi, L., Fowler, M., Young, S.B., et al: ‘Energy efficiency of li-ion battery packs re-used in stationary power applications’, Sustain. Energy Technol. Assessments, 2014, 8, pp. 917. Available at http://www.sciencedirect.com/science/article/pii/S2213138814000551.
    4. 4)
      • 33. PJM: ‘RTO Regulation Signal Data’, 2018. Available at https://www.pjm.com/markets-and-operations/ancillary-services.aspx.
    5. 5)
      • 3. Byrne, R.H., Nguyen, T.A., Copp, D.A., et al: ‘Energy management and optimization methods for grid energy storage systems’, IEEE Access, 2017, 6, pp. 1323113260.
    6. 6)
      • 7. Ding, H., Pinson, P., Hu, Z., et al: ‘Optimal offering and operating strategy for a large wind-storage system as a price maker’, IEEE Trans. Power Syst., 2017, 32, (6), pp. 49044913.
    7. 7)
      • 15. Qin, Y., Hua, H., Cao, J.: ‘Stochastic optimal control scheme for battery lifetime extension in islanded microgrid via a novel modeling approach’, IEEE Trans. Smart Grid, 2018, 10, (4), pp. 44674475.
    8. 8)
      • 18. Xu, B., Zhao, J., Zheng, T., et al: ‘Factoring the cycle aging cost of batteries participating in electricity markets’, IEEE Trans. Power Syst., 2018, 33, (2), pp. 22482259.
    9. 9)
      • 6. Nguyen, T.A., Byrne, R.H., Concepcion, R.J., et al: ‘Maximizing revenue from electrical energy storage in MISO energy and frequency regulation markets’. 2017 IEEE Power Energy Society General Meeting, Chicago, IL, USA, 2017, pp. 15.
    10. 10)
      • 24. PJM: ‘Manual 28: operating agreement accounting’ (PJM, Valley Forge, PA, USA, 2014).
    11. 11)
      • 23. Federal Energy Regulatory Commission: ‘Final rule order no. 755: Frequency regulation compensation in the organized wholesale power markets’, 2011, vol. 137.
    12. 12)
      • 22. North American Electric Reliability Corporation: ‘Operating practices, procedures and tools’ (North American Electric Reliability Corporation, Princeton, NJ, 2011).
    13. 13)
      • 17. Liu, C., Wang, X., Wu, X., et al: ‘Economic scheduling model of microgrid considering the lifetime of batteries’, IET. Gener. Transm. Distrib., 2017, 11, (3), pp. 759767.
    14. 14)
      • 2. Federal Energy Regulatory Commission. ‘Electric Power Markets’. [Accessed 15-May-2020]. Available at https://www.ferc.gov/market-assessments/mkt-electric/overview.asp.
    15. 15)
      • 12. U. S. Energy Information Administration. ‘U.S. Battery Storage Market Trends’, 2018. Available at https://www.eia.gov/analysis/studies/electricity/batterystorage.
    16. 16)
      • 36. Tian, Y., Zhao, D., Hong, T., et al: ‘Cost and efficiency analysis for hybrid ac/dc distribution system planning with pv and battery’. 2020 IEEE Power & Energy Society Innovative Smart Grid Technologies Conf. (ISGT), Washington D.C., USA, 2020, pp. 15.
    17. 17)
      • 34. Byrne, R.H., Silva-Monroy, C.A.: ‘Estimating the maximum potential revenue for grid connected electricity storage: arbitrage and regulation’ (Sandia National Laboratories, USA, 2012).
    18. 18)
      • 9. Yan, X., Gu, C., Wyman-Pain, H., et al: ‘Capacity share optimization for multiservice energy storage management under portfolio theory’, IEEE Trans. Ind. Electron., 2018, 66, (2), pp. 15981607.
    19. 19)
      • 21. Bera, A., Almasabi, S., Mitra, J., et al: ‘Spatiotemporal optimization of grid-connected energy storage to maximize economic benefits’. 2019 IEEE Industry Applications Society Annual Meeting (IAS), Baltimore, MD, USA, 2019, pp. 17.
    20. 20)
      • 28. Cready, E., Lippert, J., Pihl, J., et al: ‘Final report technical and economic feasibility of applying used EV batteries in stationary applications’ (Sandia National Laboratory, USA, 2003).
    21. 21)
      • 30. Lacey, G., Putrus, G., Salim, A.: ‘The use of second life electric vehicle batteries for grid support’. Eurocon 2013, Zagreb, Croatia, 2013, pp. 12551261.
    22. 22)
      • 14. Peterson, S.B., Apt, J., Whitacre, J.F.: ‘Lithium-ion battery cell degradation resulting from realistic vehicle and vehicle-to-grid utilization’, J. Power Sources, 2010, 195, (8), pp. 23852392.
    23. 23)
      • 1. Conejo, A.J., Carrión, M., Morales, J.M., et al: ‘‘Decision making under uncertainty in electricity markets’, vol. 1 (Springer, USA, 2010).
    24. 24)
      • 39. PJM.PJM Data Miner2’. Available at http://www.pjm.com/markets-and-operations/etools/data-miner-2.aspx.
    25. 25)
      • 41. Cole, W.J., Frazier, A.: ‘Cost projections for utility-scale battery storage’ (National Renewable Energy Lab. (NREL), Golden, CO (United States), 2019).
    26. 26)
      • 42. DiOrio, N., Dobos, A., Janzou, S.: ‘Economic analysis case studies of battery energy storage with sam’ (National Renewable Energy Lab. (NREL), Golden, CO (United States), 2015).
    27. 27)
      • 16. Ju, C., Wang, P.: ‘Energy management system for microgrids including batteries with degradation costs’. 2016 IEEE Int. Conf. on Power System Technology (POWERCON) (IEEE), Wollongong, NSW, Australia, 2016, pp. 16.
    28. 28)
      • 25. Leitermann, O.: ‘Energy storage for frequency regulation on the electric grid’ (Massachusetts Institute of Technology, USA, 2012).
    29. 29)
      • 11. Dunn, B., Kamath, H., Tarascon, J.M.: ‘Electrical energy storage for the grid: a battery of choices’, Science, 2011, 334, (6058), pp. 928935.
    30. 30)
      • 26. Tian, Y., Bera, A., Mitra, J., et al: ‘Effect of operating strategies on the longevity of lithium-ion battery energy storage systems’. In 2018 IEEE Industry Applications Society Annual Meeting (IAS), Portland, OR, USA, September 2018, pp. 18.
    31. 31)
      • 32. Kempton, W., Tomić, J.: ‘Vehicle-to-grid power fundamentals: calculating capacity and net revenue’, J. Power Sources, 2005, 144, (1), pp. 268279.
    32. 32)
      • 5. Tian, Y., Bera, A., Benidris, M., et al: ‘Stacked revenue and technical benefits of a grid-connected energy storage system’, IEEE Trans. Ind. Appl., 2018, 54, (4), pp. 30343043.
    33. 33)
      • 40. Fu, R., Remo, T.W., Margolis, R.M.: ‘2018 US utility-scale photovoltaics-plus-energy storage system costs benchmark’ (National Renewable Energy Lab. (NREL), Golden, CO (United States), 2018).
    34. 34)
      • 13. Monitoring Analytics, LLC. ‘State of the Market Report for PJM’, 2018. Available at http://www.monitoringanalytics.com.
    35. 35)
      • 19. Downing, S.D., Socie, D.: ‘Simple rainflow counting algorithms’, Int. J. Fatigue, 1982, 4, (1), pp. 3140.
    36. 36)
      • 37. Schoenung, S.M., Hassenzahl, W.V.: ‘Long-vs. short-term energy storage technologies analysis: a life-cycle cost study: a study for the DOE energy storage systems program’ (Sandia National Laboratories, USA, 2003).
    37. 37)
      • 27. Xu, B., Oudalov, A., Ulbig, A., et al: ‘Modeling of lithium-ion battery degradation for cell life assessment’, IEEE Trans. Smart Grid, 2016, 9, (2), pp. 11311140.
    38. 38)
      • 31. Casals, L.C., Barbero, M., Corchero, C.: ‘Reused second life batteries for aggregated demand response services’, J. Clean Prod., 2019, 212, pp. 99108. Available at http://www.sciencedirect.com/science/article/pii/S0959652618337077.
    39. 39)
      • 43. Hart, W.E., Watson, J.P., Woodruff, D.L.: ‘Pyomo: modeling and solving mathematical programs in python’, Math. Programming Comput., 2011, 3, (3), pp. 219260.
    40. 40)
      • 20. National Renewable Energy Laboratory. ‘Declining Renewable Costs Drive Focus on Energy Storage’. [Online; accessed 15-May-2020]. Available at https://www.nrel.gov/news/features/2020/declining-renewable-costs-drive -focus-on-energy-storage.html.
    41. 41)
      • 8. Cheng, B., Powell, W.B.: ‘Co-optimizing battery storage for the frequency regulation and energy arbitrage using multi-scale dynamic programming’, IEEE Trans. Smart Grid, 2018, 9, (3), pp. 19972005.
    42. 42)
      • 35. Bera, A., Mitra, J., Nguyen, N.: ‘Lifetime revenue from energy storage considering battery degradation’. 2019 North American Power Symp. (NAPS), Wichita, KS, USA, 2019, pp. 16.
    43. 43)
      • 38. Reliability Test System Task Force of the Application of Probability Methods Subcommittee: ‘IEEE reliability test system’, IEEE Trans. Power Appar. Syst., 1979, PAS-98, (6), pp. 20472054.
http://iet.metastore.ingenta.com/content/journals/10.1049/iet-gtd.2020.0403
Loading

Related content

content/journals/10.1049/iet-gtd.2020.0403
pub_keyword,iet_inspecKeyword,pub_concept
6
6
Loading
This is a required field
Please enter a valid email address