For a home or business, the economics of installing battery storage is often a challenge. While falling costs are slowly improving on one end of the equation, a new study led by Stefan Englberger at the Technical University of Munich highlights the other side of the balance ̵1; the optimization of financial benefits.
The battery is usually inserted for a specific purpose. It could be to enable more self-consumption of electricity generated by your own solar panels, such as reducing the purchase of electricity from the grid overnight. It can help you avoid buying power during peak times, when prices over time increase. Or you can use the battery to deal with an unreliable power outage on the grid. These strategies leave the battery “idle” during times of the day – for comparison, imagine buying a taxi but only running it in the morning. Having another driver run it in the afternoon will increase the car’s mileage, but it will also return your investment faster.
Researchers began to simulate a way to increase battery usage. Using batteries to deliver more services can optimize the income generated, although this will of course have to be balanced with faster battery degradation. But there’s a big hurdle to deal with before this balance becomes important, the researchers say. This is because the regulations require that the “behind the meter” battery functions be separate from the “front of the meter” functions that serve the grid, not the battery owner.
If you separate those functions into separate batteries or even with fixed parts of a single battery, you will basically come back to poor use again. Instead, the researchers propose that these requirements can be met by an intelligent battery management system, which virtually divides battery capacity over a certain amount of time. That way, the system can supply a certain amount of power to the grid and promises that any use after the meter will not compete.
Battery saving performance
To investigate how they might work, the researchers simulated a 1.34 megawatt hour / 1.25 megawatt hour lithium-ion battery for a commercial facility in Germany. They looked at four potential functions: increasing self-absorption, cutting peak demand, regulating the frequency of the grid, and trading the spot market (charging low and selling electricity to the grid when prices are high).
In each case, they count only the economic potential of each function, as well as the different combinations. They also track battery capacity degradation through cycling and elapsed time. For example, peak shaving alone will generate around 43 euros per kilowatt-hour per year, with batteries lasting 15 years before reducing capacity to 80%. Combining top scrape with spot market trading will push profits up to 261 euros per kilowatt hour per year, but it reduces the lifetime to about eight years.
Ultimately, the optimal combination appears to be a top scraper, frequency adjustment and some spot market trades. The nice thing about frequency tuning is that it involves minimal changes (but fluctuations) in the charge level, resulting in less attenuation than deep cycle. Spot market transactions may However, resulting in a lot of cycles, so the algorithm here will limit its usage to only the most profitable exchanges.
This particular combination involves relatively little competition between functions, such that each function retains at least 84% of its profit potential for its sole use. Battery life is reduced, but the profits add more than compensate. The return on investment is the largest in this scenario, although the other combinations also beat all the single functional scenarios.
There could be a sustainability angle to look at here, as you’re burning battery life faster to reap more financial value. But you need a system-wide perspective to judge that – shorter lifespan can be compensated for by using each more efficiently.
Sticking to economics, the researchers point out that utilities and regulators can make battery operation easier in this way, which in turn encourages more investment.
They write: “Policy makers interested in accelerating the deployment of energy storage to facilitate the transformation of sustainable energy systems should note that multi-function operation has the potential to replaces the need for costly implementation subsidies. You can’t always subsidize something for free.
Cell Physics Science Report, 2020. DOI: 10.1016 / j.xcrp.2020.100238 (Introduction to DOI).