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Title: Impact of battery degradation on energy arbitrage revenue of grid-level energy storage

This study investigates the representation of battery degradation in grid level energy storage applications. In particular, we focus on energy arbitrage, as this is a potential future large-scale application of energy storage and there is limited existing research combining the modelling of battery degradation and energy storage arbitrage. We implement two different representations of battery degradation within an energy arbitrage model, and show that degradation has a strong impact on battery energy storage system (BESS) profitability. In a case study using historical electricity market prices from the MISO electricity market in the United States, we find that the achievable net present value (at an interest rate of 10%) for a battery system with a C-rate of 1C dropped from 358 /kWh in the case considering no degradation to 194-314 /kWh depending on the battery degradation model and assumptions for end of life (EOL) criteria. This corresponds to a reduction in revenue due to degradation in the 12-46% range.Furthermore, we find that reducing the cycling of the bat-tery via introducing a penalty cost in the objective function of the energy arbitrage optimization model can improve the profitability over the life of the BESS.
Authors:
 [1] ;  [2] ;  [2] ;  [3]
  1. Karlsruhe Institute of Technology (Germany); Argonne National Lab. (ANL), Argonne, IL (United States)
  2. Argonne National Lab. (ANL), Argonne, IL (United States)
  3. Argonne National Lab. (ANL), Argonne, IL (United States); Massachusetts Inst. of Technology (MIT), Cambridge, MA (United States)
Publication Date:
Grant/Contract Number:
AC02-06CH11357
Type:
Accepted Manuscript
Journal Name:
Journal of Energy Storage
Additional Journal Information:
Journal Volume: 10; Journal Issue: C; Journal ID: ISSN 2352-152X
Publisher:
Elsevier
Research Org:
Argonne National Lab. (ANL), Argonne, IL (United States)
Sponsoring Org:
Argonne National Laboratory, Laboratory Directed Research and Development (LDRD); USDOE
Country of Publication:
United States
Language:
English
Subject:
25 ENERGY STORAGE; energy arbitrage; optimization; battery energy storage; battery lifetime; degradation; electricity markets
OSTI Identifier:
1393934
Alternate Identifier(s):
OSTI ID: 1413046

Wankmüller, Florian, Thimmapuram, Prakash R., Gallagher, Kevin G., and Botterud, Audun. Impact of battery degradation on energy arbitrage revenue of grid-level energy storage. United States: N. p., Web. doi:10.1016/j.est.2016.12.004.
Wankmüller, Florian, Thimmapuram, Prakash R., Gallagher, Kevin G., & Botterud, Audun. Impact of battery degradation on energy arbitrage revenue of grid-level energy storage. United States. doi:10.1016/j.est.2016.12.004.
Wankmüller, Florian, Thimmapuram, Prakash R., Gallagher, Kevin G., and Botterud, Audun. 2017. "Impact of battery degradation on energy arbitrage revenue of grid-level energy storage". United States. doi:10.1016/j.est.2016.12.004. https://www.osti.gov/servlets/purl/1393934.
@article{osti_1393934,
title = {Impact of battery degradation on energy arbitrage revenue of grid-level energy storage},
author = {Wankmüller, Florian and Thimmapuram, Prakash R. and Gallagher, Kevin G. and Botterud, Audun},
abstractNote = {This study investigates the representation of battery degradation in grid level energy storage applications. In particular, we focus on energy arbitrage, as this is a potential future large-scale application of energy storage and there is limited existing research combining the modelling of battery degradation and energy storage arbitrage. We implement two different representations of battery degradation within an energy arbitrage model, and show that degradation has a strong impact on battery energy storage system (BESS) profitability. In a case study using historical electricity market prices from the MISO electricity market in the United States, we find that the achievable net present value (at an interest rate of 10%) for a battery system with a C-rate of 1C dropped from 358 /kWh in the case considering no degradation to 194-314 /kWh depending on the battery degradation model and assumptions for end of life (EOL) criteria. This corresponds to a reduction in revenue due to degradation in the 12-46% range.Furthermore, we find that reducing the cycling of the bat-tery via introducing a penalty cost in the objective function of the energy arbitrage optimization model can improve the profitability over the life of the BESS.},
doi = {10.1016/j.est.2016.12.004},
journal = {Journal of Energy Storage},
number = C,
volume = 10,
place = {United States},
year = {2017},
month = {1}
}