Abstract
Conventional fossil-fuel-based power systems are undergoing rapid transformation via the replacement of coal-fired generation with wind and solar farms. The stochastic and intermittent nature of such renewable sources demands alternative dispatchable technology capable of meeting system stability and reliability needs. Battery energy storage can play a crucial role in enabling the high uptake of wind and solar generation. However, battery life is very sensitive to the way battery energy storage systems (BESS) are operated. In this paper, we propose a framework to analyse battery operation in the Australian National Electricity Market (NEM) electricity spot and contingency reserve markets. We investigate battery operation in different states of Australia under various operating strategies. By considering battery degradation costs within the operating strategy, BESS can generate revenue from the energy market without significantly compromising battery life. Participating in contingency markets, batteries can substantially increase their revenue with almost no impact on battery health. Finally, when battery systems are introduced into highly volatile markets (such as South Australia) more aggressive cycling of batteries leads to accelerated battery aging, which may be justified by increased revenue. The findings also suggest that with falling replacement costs, the operation of battery energy systems can be adjusted, increasing immediate revenues and moving the battery end-of-life conditions closer.
Highlights
Power systems traditionally rely on fossil-fuel-based generation to meet electricity demand and provide important system services that are required to keep the system in a stable state
We investigate the impact of regional generation mix on the benefits of battery participation in electricity markets, by considering battery operation in different regions dominated by particular sources of generation, such as coal, gas, hydro, wind or solar
For a generic lithium-ion battery, there are different factors that might result in battery-cell degradation
Summary
Power systems traditionally rely on fossil-fuel-based generation to meet electricity demand and provide important system services that are required to keep the system in a stable state. The Australian power grid has welcomed 260 MW of battery energy storage systems (BESS) operating capacity, with the system operator expecting approximately 19 GW of combined flexible, dispatchable generation to arrive in the coming two decades [29]. Others have presented methods for including the effect of degradation on a battery’s operational cost function [34] These different approaches to inclusion of degradation, in turn, determine the way batteries are operated, and on their location, the value of benefits that BESS are able to yield. We propose a framework for evaluating the effectiveness of battery participation in energy and contingency reserve markets. A mathematical model for assessing battery operation in different electricity markets (i.e., energy trading, provision of frequency regulation services), considering various control strategies, is developed.
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