Rechargeable Batteries for Simultaneous Demand Peak Shaving and Price Arbitrage Business

Abstract

The goal of this study is to assess the economics of deploying rechargeable batteries for simultaneous demand peak shaving and price arbitrage business. To this end, we present a novel modeling approach for investment and operational decision-making, which supports the selection of battery technology and size among different Li-ion batteries and optimizes the scheduling of battery charge and discharge. Battery degradation incurring due to repeated charging and discharging is accounted for by implementing the Rainflow cycle counting algorithm in an energy-economic modeling framework for operational dispatch optimization. This allows for an accurate representation of cycle battery degradation in the optimization model. Simulation results obtained for a Swiss electricity service provider show that battery deployment is currently only economically viable if the sizes of energy capacity and power units are selected judiciously. Furthermore, our case-specific findings reveal that the cycle lifetime of a battery has only a minor impact on the achievable life cycle revenues, which can be attributed to the fact that a small number of charge and discharge cycles is sufficient to exploit the most profitable revenue opportunities. Based on the conducted case study, we argue that second-use batteries could be particularly appealing for stationary energy storage.