Impact of Battery Degradation on Market Participation of Utility-Scale Batteries: Case Studies

TL;DR

This paper investigates how battery degradation affects the operational strategies and economic outcomes of utility-scale batteries in energy markets, emphasizing the importance of including degradation costs in decision-making.

Contribution

It introduces and compares two optimization frameworks for BESS market participation, highlighting the significance of degradation costs in operational scheduling.

Findings

Degradation cost significantly influences BESS scheduling decisions.

Ignoring degradation costs can lead to suboptimal economic outcomes.

Inclusion of degradation costs improves the accuracy of BESS revenue and cost estimations.

Abstract

The recent decrease in battery manufacturing costs stimulates the market participation of utility-scale battery energy storage systems (BESSs). However, battery degradation remains a major concern for BESS owners while determining their BESS investment and operation strategies. This paper studies the impact of battery degradation on BESS's operation and revenue/cost in real-time energy, reserve, and pay as performance regulation markets. Comparative case studies are performed on two optimization frameworks which model the participation of a price-maker BESS in energy and ancillary services markets with and without considering battery degradation cost. A synthetic test system built upon real-world data is adopted in the case studies. Analyses reveal that degradation cost plays an important role in the scheduling of BESSs and should not be neglected. Several potential enhancements to the optimization frameworks are discussed based on the performed analyses.