Abstract
The cost of peak power for end-users subject to a demand charge may be substantial, expecting to increase further with the vast growth of power-demanding devices. In cases where load-shifting is not a viable option for cost reduction, battery storage systems used for peak shaving purposes are emerging as a promising solution. In this paper, the economic benefits of implementing battery storage into an existing grid-connected photovoltaic system for a medium-scale swimming facility is studied. The objective is to minimize the total cost of electricity for the facility, including the cost of energy and peak power demand, while ensuring the longevity of the battery. An optimization model based on multi-integer linear programming is built, and simulated using a one-year time horizon in GAMS and Matlab. The main results reveal that installing a battery storage system is economically attractive today, with net savings on the total system cost of 0.64% yearly. The cost of peak power is reduced by 13.9%, and the savings from peak shaving operation alone is enough to compensate for the yearly cost of the battery. Moreover, the battery ensures additional revenue by performing price arbitrage operations. When simulating the system for an assumed 2030 scenario, the battery is found to be more profitable with a yearly net savings of 4.15%.
Highlights
With the vast implementation of power-demanding devices, power suppliers are looking for ways to cope with supply challenges
Presented throughout the paper, they are summarized below for convenience: (a) The load demand and solar production are estimated based on historical data, as described in Section 3.2. (b) The hourly load demand and solar production are known prior to solving the problem, i.e., a perfect forecasting model is assumed. (c) The battery is based on the characteristics of a lithium-ion nickel manganese cobalt oxide (NMC) battery. (d) Both the efficiency of the battery energy storage system (BESS) inverter and the round-trip efficiency of the battery are considered constant
(e) An real-time pricing” (RTP) scheme is assumed, and the hourly energy tariffs are set equal to the Elspot day-ahead prices in Oslo for 2017. (f) The cost of the BESS is assumed to include all component cost and cost of installation and is set equal to the cost estimates for NMC technologies from 2016 [10]. (g) The degradation cost of the battery is modeled as a percentage of the initial investment cost, such that when the battery reaches the end of its lifetime the initial costs are accounted for
Summary
With the vast implementation of power-demanding devices, power suppliers are looking for ways to cope with supply challenges. One solution is implementing peak demand charges, encouraging end users to reduce their power demand. Doing so in terms of shifting the load to off-peak hours is not always a viable option, especially for commercial users, as the load demand may be highly dependent on external factors. An alternative solution may be to implement battery storage for peak shaving purposes, which could reduce the cost of peak power for the end user. When subject to an hourly pricing scheme, a likely scenario in the near future due to the new smart meters, the customer could benefit further by using the battery for price arbitrage operations: the battery charges during hours of low prices and discharges when the prices are high, increasing its economic value.
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