Decision making under uncertainty for deploying battery storage as a non-wire alternative in distribution networks

TL;DR

This paper develops a decision-making framework using system optimization and Markov decision processes to evaluate battery storage as a non-wire alternative for distribution network upgrades in emerging markets, demonstrating cost savings and strategic deployment insights.

Contribution

It introduces a flexible valuation framework combining system optimization and MDPs for deploying battery storage as a non-wire alternative in uncertain demand growth scenarios.

Findings

Battery storage can defer significant network upgrades in Delhi, India.

Cost-effective deployment of 18-29 GWh of storage could save 12-16% in capital costs.

Lower storage costs do not always lead to increased deployment due to network constraints.

Abstract

The growing demand for electricity in emerging markets and developing economies (EMDE) such as India is causing loading and congestion problems on distribution networks, particularly in urban locations, that adversely impact sustainable development and economic growth. Electric utilities in these economies face unique constraints regarding raising capital required to upgrade their congested networks. Battery storage has emerged as a non-wire alternative (NWA) to feeder upgrades. This article presents a flexible valuation framework for battery storage use in distribution networks and its application in the context of EMDE distribution network planning. We evaluate the value of storage as an NWA using a multi-stage decision making process that combines system optimization with markov-decision processes (MDP) to identify the least-cost network upgrade strategy under demand growth uncertainty. When applied to feeders in Delhi, India, the approach highlights the cost-effectiveness of battery storage to manage load growth while deferring network investments. Across the low, medium and high battery storage capital cost projections for 2030, we estimate that 18 to 29 GWh of battery storage capacity could be deployed to defer 11,752 to 15,914 km of medium voltage distribution feeder lines that are loaded at 60\% or more of their ampere capacity in 2030, resulting in 12 to 16\% capital cost savings. Interestingly, the lowering storage capital costs does not always increase NWA storage deployment, due to network capacity constraints limiting opportunities for off-peak storage charging.