Power System Dispatch with Marginal Degradation Cost of Battery Storage

TL;DR

This paper derives a time-variant marginal degradation cost for battery storage in power system dispatch, accounting for battery aging, economic factors, and grid conditions, to improve long-term operational efficiency.

Contribution

It introduces a rigorous derivation of the optimal marginal degradation cost that incorporates battery health, time value of money, and grid marginal costs, advancing dispatch strategies.

Findings

Optimal marginal degradation cost varies over time.

Degradation cost depends on battery health and grid marginal costs.

Case studies illustrate the evolution of degradation costs in dispatch.

Abstract

Battery storage is essential for the future smart grid. The inevitable cell degradation renders the battery lifetime volatile and highly dependent on battery dispatch, and thus incurs opportunity cost. This paper rigorously derives the marginal degradation cost of battery for power system dispatch. The derived optimal marginal degradation cost is time-variant to reflect the time value of money and the functionality fade of battery and takes the form of a constant value divided by a discount factor plus a term related to battery state of health. In case studies, we demonstrate the evolution of the optimal marginal costs of degradation that corresponds to the optimal long-term dispatch outcome. We also show that the optimal marginal cost of degradation depends on the marginal cost of generation in the grid.