For a home or business, installing battery storage is often a challenge. While falling costs gradually improve one end of the equation, a new study led by Stefan Englberger of the Technical University of Munich highlights the other side of the balance: optimizing the financial benefits.
Batteries are usually installed for one specific purpose. It may be to enable greater self-consumption of electricity generated by your own solar panels, for example by making fewer purchases from the grid at night. It could be to allow you to avoid purchasing power during peak times, when the price for usage time goes up. Or you can use the battery to troubleshoot an unreliable network. These strategies leave the battery “idle” for part of the day – for comparison, imagine buying a cab but only letting it run in the morning. If another driver serves him in the afternoon, the vehicle will cost extra mileage, but it would also pay back your investment faster.
The researchers wanted to simulate a way to increase battery usage. Using the battery to provide multiple services could optimize the revenue generated, although of course this has to be balanced against the faster degradation of the battery. But there is still a major hurdle to overcome before this balance matters, the researchers say. That’s because regulations require that “behind-the-meter” battery functions can be separated from “before-the-meter” functions that serve the utility grid rather than the battery owner.
If you break those features down into individual batteries, or even into fixed shares of one battery, you’re really back to the underutilization problem. Instead, the researchers propose that the requirements can be met by a smart battery management system that virtually distributes battery capacity over a period of time. That way, the system can supply a certain portion of the capacity to the grid and promise that use behind the meter will not compete.
The battery gig economy
To investigate how these might work, the researchers simulate a 1.34 megawatt-hour/1.25 megawatt lithium-ion battery for a commercial building in Germany. They consider four possible functions: increased self-consumption, peak demand elimination, grid frequency regulation, and spot market trading (charging when prices are low and selling electricity to the grid when prices are high).
They calculate the economic potential of each function separately, but also in different combinations. They also track the decline in battery capacity through cycling and the passage of time. For example, if you only do peak shaving, you would generate about $43 per kilowatt hour per year, with the battery lasting 15 years before dropping to 80 percent of capacity. Combining peak shaving with spot market trading, the profit increases to 261 euros per kilowatt hour per year, but the lifespan is shortened to about eight years.
In the end, the optimal combination turned out to be peak shaving, frequency regulation and some spot market trading. The beauty of frequency control is that it involves minimal (but fluctuating) changes in the charge level, resulting in less degradation than deep cycling. spot market trading can result in a lot of bikes, so the algorithm here would limit usage to only the most profitable exchanges.
This particular combination involves relatively little competition between features, so each retains at least 84 percent of its profit potential for its sole use. Battery life is shortened, but the extra gain more than makes up for it. The return on investment is greatest in this scenario, although other combinations are also better than all single-function scenarios.
There may be a sustainability angle here to consider, as you’ll burn out battery life faster to extract more financial value. But you need a system-wide perspective to evaluate that: the shorter lifespan can be offset by more efficient use of each battery.
Holding on to the economy, the researchers point out that this way utilities and regulators could make it easier to use batteries, which in turn would encourage more investment.
“Policies interested in accelerating the implementation of energy storage to facilitate a transformation of the renewable energy system should consider that multi-use operation has the potential to replace the need for expensive implementation subsidies,” they write. . It’s not often that you can subsidize something for free.
Cell Reports Physical Science, 2020. DOI: 10.116/j.xcrp.2020.100238 (About DOIs).