Abstract
This study seeks to determine a suitable arbitrage strategy that allows a battery energy storage system (BESS) owner to obtain the maximum economic benefits when participating in the Colombian electricity market. A comparison of different arbitration strategies from the literature, such as seasonal, statistical, and neural networks-based models, is performed. To determine BESS’s optimal operation, a Mixed Integer Linear Programming (MILP) optimization problem is formulated, including a battery degradation model based on an upper piecewise linear approximation method. A financial evaluation of the different arbitrage strategies is carried out, resulting, for all the analyzed cases, in a negative net present value (NPV); thus, the results show that the income obtained from BESS when only performing energy arbitrage in the Colombian market do not compensate the investment costs. Results have also shown that strategies based on statistical and prediction models have a better performance than seasonal strategies, especially in atypical circumstances such as COVID-19.
Highlights
C-rates studied, in terms of total incomes (objective function presented in Equation (1)), battery energy storage system (BESS) degradation, and Net Present Value (NPV)
This is the opposite of the results observed in case B, where the strategy is less conservative, since it is based on a Recurrent Neural Network (RNN), and better incomes are obtained
The results have shown that strategies in which a market’s behavior forecast is performed with a greater amount of data, such as statistical and neural network-based strategies, have a better performance than seasonal strategies that only use a small amount of historical data to define the BESS operation
Summary
Most of the projects are based on electrochemical storage systems (46%), followed by pumping stations (42%) [1]. These systems’ installed capacity is expected to reach 1095 GW/2850 GWh in 2040, based on information reported by Bloomberg in [2]. This growth is because Energy Storage Systems (ESS) allows, among other benefits to the power systems, higher penetration of intermittent renewable generation, and the exponential reduction of their installation cost. Between 2010 and 2018, the price of lithium-ion batteries was reduced by 85% [2]—a reduction that could be even greater, reaching prices of USD $62/kWh in 2030 [3]
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