Analysis of methods to improve energy storage arbitrage benefit considering capacity degradation

Abstract

The addition of energy storage systems into the grid will allow to mitigate the effects of imbalances caused by the uncertainties of renewable energy sources. Energy storage facilities would give the grid more reliability and efficiency. One of the applications of these facilities is energy arbitrage, which is the trade of energy with the grid using price variability through the day to obtain a benefit. To impulse the investments on energy storage systems connected to the grid, they must be economically viable. The arbitrage operation can be optimized to ensure that viability. The optimization can improve the device’s profitability by controlling its degradation. This degradation management can be done in different perspectives attending to economical considerations which may change the way that profitability is viewed. In this paper, the mitigation of this deterioration process is done with two approaches by whether considering it as an operational or as an opportunity cost. Both approaches are compared, with simulation results of a Li-ion Battery Energy Storage System (BESS) performing arbitrage on the Spanish day-ahead electricity market. The main contribution of this work is the opportunity cost concept, which uses a more realistic calculation of degradation impact on arbitrage schedule.