Economic analysis and optimal sizing for behind-the-meter battery storage

Abstract

This paper proposes methods to estimate the potential benefits and determine the optimal energy and power capacity of battery storage system for behind-the-meter application. In the proposed method, a linear programming is first formulated using typical load profiles, energy/demand charge rates, and a set of battery parameters to determine the maximum saving in electric energy cost. The optimization formulation is then adapted to include battery cost as a function of its power and energy capacity in order to capture the trade-off between benefits and cost, and therefore to determine the most economic battery size. Using the proposed methods, economic analysis and optimal sizing have been performed for a few commercial buildings and utility rate structures that are representative of those found in the various regions in the U.S. The key factors that affect the economic benefits and optimal size have been identified. The proposed methods and case study results cannot only help commercial and industrial customers or battery vendors to evaluate and size the storage system for behind-the-meter application, but also assist utilities and policy makers to design electricity rate or subsidies to promote the development of energy storage.