economic feasibility

7252019 Economic Feasibility

httpslidepdfcomreaderfulleconomic-feasibility 112

Economic feasibility of stationary electrochemical storages for electricbill management applications The Italian scenario

E Telaretti a G Graditi bn MG Ippolito a G Zizzo a

a DEIM - Universitagrave di Palermo Italyb ENEA Portici Research Center Italy

H I G H L I G H T S

We examine the convenience of using BESS to reduce customer electricity bill We make a comparison among different types of batteries for end-user applications We evaluate the convenience of using storage in presence of demand charges A parametric analysis changing the BESS cost electricity prices and demand charges has been carried out A case study is performed to show the advantagesdisadvantages of this approach

a r t i c l e i n f o

Article history

Received 28 September 2015

Received in revised form

11 March 2016

Accepted 2 April 2016Available online 13 April 2016

KeywordsBattery energy storage

load shifting

technical-economical evaluation

peak demand charges

case study

a b s t r a c t

Battery energy storage systems (BESSs) are expected to become a fundamental element of the electricity

infrastructure thanks to their ability to decouple generation and demand over time BESSs can also be

used to store electricity during low-price hours when the demand is low and to meet the demand

during peak hours thus leading to savings for the consumer This work focuses on the economic viability

of BESS from the point of view of the electricity customer The analysis refers to a lithium-ion (Li-ion) an

advanced lead-acid a zinc-based a sodium-sulphur (NaS) and a 1047298ow battery The total investment and

replacement costs are estimated in order to calculate the cumulated cash 1047298ow the net present value(NPV) and the internal rate of return (IRR) of the investment A parametric analysis is further carried out

under two different assumptions a) varying the difference between high and low electricity prices b)

varying the peak demand charges The analysis reveals that some electrochemical technologies are more

suitable than others for electric bill management applications and that a pro1047297t for the customer can be

reached only with a signi1047297cant difference between high and low electricity prices or when high peak

demand charges are applied

amp 2016 Elsevier Ltd All rights reserved

1 Introduction

Stationary energy storage systems (ESSs) are gaining a lot of in-

terest in recent years mainly because of the deployment of renewable

energy sources (RESs) in the electricity sector like wind and solarphotovoltaic (PV) (Campoccia et al 2008 Telaretti and Dusonchet

2014 Pecoraro et al 2015 Favuzza et al 2015) Indeed the variability

and non-dispatchable nature of the energy produced by these re-

newable sources has led to concerns regarding the stability and the

reliability of the power grid (Bueno et al 2016) ESSs represent a valid

solution to the stability problems mainly thanks to their ability to

decouple generation and demand over time also providing the an-

cillary services necessary to ensure a proper operation of the power

system For these reasons ESSs are expected to become a fundamental

element of the electricity infrastructure in the coming years Among

energy storage technologies electrochemical storage systems at-tracted the interest of the scienti1047297c industrial and political commu-

nity thanks to their favourable characteristics such as fast response

time modularity and scalability Furthermore many electrochemical

technologies have a high cost reduction potential although several

problems remain to be solved such as safety issues utility acceptance

and regulatory barriers

ESSs can provide many bene1047297ts to the power grid that can be

classi1047297ed as (Divya and Oslashstergaard 2009 Sandia 2010 Sutanto

and Lachs 1997)

bene1047297ts related to loadgeneration shifting

Contents lists available at ScienceDirect

journal homepage wwwelseviercomlocateenpol

Energy Policy

httpdxdoiorg101016jenpol201604002

0301-4215amp 2016 Elsevier Ltd All rights reserved

n Corresponding author

E-mail addresses t elarettidieetunipait (E Telaretti)

giorgiograditieneait (G Graditi) ippolitodieetunipait (MG Ippolito)

zizzodieetunipait (G Zizzo)

Energy Policy 94 (2016) 126 ndash 137



bene1047297ts related to ancillary services bene1047297ts related to grid system applications

A description of energy storage applications according to the De-

partment of Energy (DOE) database is reported in Table A1 of Ap-

pendix A (Sandia 2016) In all these applications custom devices need

to be used to ensure a proper interconnection and a reliable control

system according to national technical speci1047297cations (Ippolito et al

2013 Falvo et al 2015 Ippolito et al 2014a 2014b Cataliotti et al

2013)

Among many applications ESSs can also be used to store electricity

during low-price hours when the demand is low and to meet the

demand during peak hours thus leading to savings for the consumer

This application also known as Time-of-Use (TOU) energy cost man-

agement could yield major bene1047297ts including a reduced need for

peak generation (particularly from expensive peaking plants) and re-

duced charge on transmission and distribution (TampD) systems

This work focuses on the economic viability of stationary bat-

tery systems from the point of view of the electricity customer

The analysis refers to a lithium ion (Li-ion) an advanced lead-acid a zinc-based a sodium-sulphur (NaS) and a 1047298ow battery The

case study focuses on a commercial facility a food supermarket

located in climatic zone E (RDS 2008)

The total investment and replacement costs are estimated in order

to calculate the cumulated cash 1047298ow the net present value (NPV) and

the internal rate of return (IRR) for the battery energy storage systems

(BESSs) used in load shifting applications A range of updated invest-

ment and replacement costs is considered for each electrochemical

technology and the economical evaluations are repeated for each

extreme value (minimum and maximum) Furthermore based on the

capital cost decrease for each BESS technology estimated in the next

1047297ve years the economic indicators are recalculated and 1047297nal con-

siderations are presented As a further step a parametric analysis is

carried out under two different assumptions a) varying the differencebetween high and low electricity prices b) varying the peak demand

charges The analysis reveals that some electrochemical technologies

are more suitable than others for electric bill management applica-

tions and that a pro1047297t for the customer can be reached only with a

signi1047297cant difference between high and low electricity prices or when

high peak demand charges are applied Simulation results also show

how the facility power pro1047297le varies as a consequence of the storage

operation

The remainder of the paper is organized as follows Section 2 de-

scribes the state-of-the art in the electrochemical storage sector Sec-

tion 3 provides an overview of stationary electrochemical technolo-

gies Section 4 describes the economic formulation and the opera-

tional assumptions Section 5 presents the case study showing the

seasonal power pro1047297les with and without storage contribution

Section 6 describes the simulation results Finally Section 7 sum-

marizes the conclusion of the work

2 State-of-the art

The evaluation of the economic feasibility of a storage system

has been addressed by several authors in the literature Wala-

walkar et al (2007) considered a NaS battery for arbitrage and

1047298ywheels for frequency control in the New York (NY) City region

The analysis indicates that both energy storage technologies have

a high probability of positive NPV for both energy arbitrage and

regulation Sioshansi et al (2009) analyzed the arbitrage value of a

price-taking storage device in the US during a six-year period

from 2002 to 2007 to understand the impact of fuel prices

transmission constraints ef 1047297ciency storage capacity and fuel mix

Dufo-Lopez et al (2009) found that the selling price of the energy

provided by the batteries during peak hours should be between

022 and 066 eurokW h in order to gain the arbitrage breakeven

point of a wind ndash battery system installed in Spain Campoccia et al(2009) evaluate the effects of the installation of ice thermal ESSs

for cooling on the power daily pro1047297le of residential buildings and

examine the economic repercussions on the electricity billing

Ekman and Jensen (2010) analyzed a number of large scale elec-

tricity storage technologies concluding that the possible revenues

from arbitrage on the Danish spot market are signi1047297cantly lower

than the estimated costs of purchasing an electricity storage sys-

tem regardless of the storage technology

Shcherbakova et al (2014) simulated the operation of small

storage devices in South Korea showing that the present market

conditions do not provide suf 1047297cient economic incentives for en-

ergy arbitrage using NaS or lithium-ion (Li-ion) batteries Telaretti

et al (2014) described the application to a medium-scale public

facility of a simple BESS operating strategy which aims to max-imize the arbitrage customer savings highlighting the variation of

the power pro1047297le as a result of the proposed charging strategy The

battery operating strategy has been further expanded and gen-

eralized in Telaretti et al (2015)

Graditi et al (2014) and Graditi et al (2016) have recently eval-

uated the economic viability of using a Li-ion a NaS and a vanadium

redox battery (VRB) for TOU applications at a consumer level when

1047298exible electricity tariffs are applied A parametric analysis is also

performed by changing the capital cost of the batteries and the dif-

ference between the maximum and the minimum electricity price

revealing that the use of BESSs for TOU applications can be econom-

ically advantageous for a medium-scale public institution facility only

if there is a signi1047297cant difference between maximum and minimum

electricity prices Ippolito et al (2015) evaluated the economic viability

Nomenclature

BESS battery energy storage system

BOP balance of plant

DOD depth-of-discharge

DOE department of energy

ESS energy storage system

HV high voltageIRR internal rate of return

Li-ion lithium-ion

LV low voltage

MV medium voltage

NaS sodium ndash sulphur

NY New York

NPV net present value

OampM operation and management

PCS power conversion system

PV photovoltaic

RES renewable energy source

SLA sealed batteries

SOC state-of-charge

TEPCO Tokyo electric power companyTOU time-of use

TSO transmission system operator

TampD transmission and distribution

VRB vanadium redox battery

VRLA valve regulated lead-acid

WACC weighted average cost of capital

E Telaretti et al Energy Policy 94 (2016) 126 ndash137 127



of using a NaS battery referring both to the hourly national prices and

to the zonal electricity prices of the Italian energy market

In the last years electrochemical energy storage sector is attracting

the interest of stakeholders and a large number of storage installa-

tions are being deployed all over the word Figs 1 and 2 show the

countries leading in terms of cumulated MW installed and number of

electrochemical storage installations (in operational status) resp-

ectively

The US DOE Energy Storage database was used for gatheringthe data (Sandia 2016)

The US is on the 1047297rst place with a total estimated power of

385 MW (196 storage installations) Japan is at the second place in

terms of MW installed (97 MW) but at the fourth place in terms of

total number of plants (35 storage installations) China is at the third

place in terms of MW installed (48 MW) at the second in terms of

number of plants (53 storage installations) Follow South Korea with

38 MW Chile (32 MW) Germany (29 MW) UK (22 MW) Nether-

lands (14 MW) and France (11 MW) The other countries are below

10 MW of estimated power It is worth noting that Chile only has two

battery installations of very big size while Italy and France show

comparatively a high number of storage installations compared to

their MW capacity (below 10 MW in both countries)

The data shown in Figs 1 ndash 2 underestimate battery installationssince decentralized storage plants are not included due to the

small size and private nature of these infrastructures

Referring to the speci1047297c Italian situation electrochemical sto-

rage systems started to attract attention among stakeholders in

the last years due to the increasing spread of RES plants in the

country both PV and wind

This situation has prompted the Italyrsquos Transmission System Op-

erator (TSO) Terna to develop many ESS projects in order to balance

the demand and supply of electricity instantaneously ensuring the

safe and cost-effective management of the transmission grid In order

to cope with this new scenario Terna Storage (a subsidiary of the

Italian TSO) launched an innovative storage investment plan that

consists of two macro-projects energy-intensive projects and power-

intensive projects (Terna Storage 2016) The power-intensive project(approved by the Italian Ministry of Economic Development in 2012)

includes a total of 40 MW of stationary energy storage projects of

different technologies with the main goal to increase the security of

electricity grid in Sicily and Sardinia The 1047297rst phase of the project

called ldquoStorage Labrdquo includes the installation of different storage

technologies for a total MW capacity of 16 MW The electrochemical

technologies include 918 MW of different Li-ion batteries (Lithium

Iron Phosphate Lithium Nickel Cobalt Aluminum and Lithium Titanate

batteries) 34 MW of sodium-nickel-chloride batteries (also known as

ZEBRA batteries) 15 MW of vanadium redox 1047298ow batteries and

192 MW of electro-chemical capacitors Based on the results of the

1047297rst phase of the project additional 24 MW will be installed They will

include a 20 MW Li-ion battery and a 4 MW sodium-nickel-chloride

battery The main applications according to the nomenclature of theDOE storage database (see appendix A) are frequency regulation

electric supply reserve capacity (spinning) voltage support voltage

regulation transmission support and black start

The energy-intensive project was launched in 2011 with the

aim to increase the stability ef 1047297ciency 1047298exibility and safety of the

Fig 1 Estimate of battery storage (MW) in the power sector by country (in operational status)

Fig 2 Number of battery storage in the power sector by country (in operational status)




power system allowing a reduction of the electricity costs and a

greater penetration of wind e PV energy into the grid In order to

achieve this goal in 2013 Terna signed an agreement with the

Japanese NGK Insulators company (the most important manu-

facturer of NaS batteries in the word) in order to provide 70 MW

(490 MW h for 7 h of discharge) of NaS batteries for installation in

the Italian transmission grid (NGK Insulators 2013)This re-

presents the 1047297rst large scale NaS battery ESS installation in the

European transmission systemThe 1047297rst phase of the project in-cludes a total of 348 MW of NaS batteries installed in the southern

Italy for about 100 million euros The NaS batteries will be used to

stabilize the transmission grid providing transmission congestion

relief frequency regulation and voltage support

In addition to the energy-intensive and the power-intensive

projects other small-sized electrochemical energy storage projects

were developed in Italy for several applications The split of bat-

tery projects by application in Italy is shown in Figs 3 and 4 (ac-

cording to the storage DOE database) expressed in terms of MW

capacity for large-sized and small-sized projects respectively

In addition to the energy-intensive and the power intensive

projects Fig 3 shows a total of 6 MW (3 Li-ion battery projects) for

TampD upgrade deferral and ramping The three projects are located

in Puglia (SAFT batteries 2013) Calabria (NEC 2014) and Sicily

(ABB 2013) regions (southern Italy) The 1047297rst two battery in-

stallations are located in areas with a high level of variable and

intermittent power from RES that can cause reverse power 1047298ows

on the high voltage (HV)medium voltage (MV) transformers Both

ESSs have been connected to primary substations The battery

storage systems will be used to control the energy 1047298ows reducing

the variability of power exchanges The third battery project is

housed in three factory-tested containers two containing the Li-

ion batteries and a third accommodating the power conversion

and energy management systems It will help to maintain grid

stability to enhance power quality and to meet peak demand

Fig 3 also shows a total of 13 MW (2 Li-ion battery projects) for

electric energy time shift and electric supply capacity The 1047297rst

project involves a total investment of 10 million euros for the

realization of one of the 1047297rst smart grid in Europe located inIsernia (Molise) (IGreenGrid 2016) The pilot smart grid project

encompasses the integration of renewable sources on low voltage

(LV) and MV networks equipments installed in homes to allow

customers to monitor their consumption recharging stations for

electric vehicles and a Li-ion battery system of 07 MW of capacity

to optimally regulate the bi-directional 1047298ows also contributing to

the voltage control and peak shaving The second battery project

includes 03 MW (06 MW h) of Li-ion battery installed in the

Ventotene island in the Tyrrhenian Sea (Campania region) di-

rectly connected to the distribution network (ENEL 2014) The Li-

ion battery will be integrated with the diesel generators in order

to store electricity for use when there are peaks in demand

allowing greater integration of PV energy into the island and en-

hancing the network 1047298exibility

Fig 3 also includes 1 MW (1 MW h) of Li-ion battery installed

in Forligrave(Emilia Romagna region) used to compensate for inter-

mittency and the attenuation of the peaks load as well as to

support the re-ignition of the electrical system in case of power

failure situations (ENEL 2013) The project has been realized by

Loccioni Group with the collaboration of Samsung SDI

A split of small sized energy storage projects in Italy is shown inFig 4 Storage projects include among others

a 180 kW (230 kW h) sodium-nickel-chloride battery realized

by FIAMM spa company to provide on-site power services three different ESSs (lithium ion batteries vanadium redox 1047298ow

batteries and ZEBRA batteries) tested at Enels research facility

in Livorno for renewable capacity 1047297rming and renewable en-

ergy time shift applications (ENEL 2012) a smart polygeneration microgrid developed by the University

of Genoa for the University campus of Savona including among

others a sodium-nickel-chloride battery of 63 kW (150 kW h)

used for renewable capacity 1047297rming and renewable energy time

shift applications (Siemens 2014) two Li-ion batteries of 32 kW (32 kW h) each one realized by

Loccioni Group with the collaboration of Samsung SDI to reg-

ulate voltage in LV lines (Loccioni 2016) a 35 kW (105 kW h) ZEBRA battery installed in a microgrid

storage system located in SantrsquoAlberto (Ravenna Italy) also

including a wind turbine (7 KW) and a PV plant (17 KW) inside

a sheep farm and cheese factory This ESS guarantees self-sus-

taining production and independency of the farm from the grid

instability providing renewable energy time shift grid-con-

nected commercial (reliability amp quality) and onsite renewable

generation shifting (Wikipedia 2015)

3 Overview of stationary electrochemical energy storages

A wide variety of electrochemical technologies are currentlyavailable for stationary applications with different performance

and characteristics The most common technologies are lead-acid

and advanced lead-acid batteries Li-ion batteries high tempera-

ture batteries and 1047298ow batteries Zinc based battery is another

promising electrochemistry although it remains yet unproven in

widespread commercial deployment The main characteristics and

performance are described in the following sections

31 Lead-acid batteries

Lead-acid batteries are the oldest type of rechargeable battery

Thanks to their low cost lead-acid batteries remain widely used in

Fig 3 Split of large-size battery projects by application in Italy (operational announced under construction)




stationary applications The main drawbacks of lead-acid batteries

are the low energy density (50 W hkg) the low cycles number

(often below 500 cycles) and maintenance requirements Modi1047297ed

versions of the standard cell have been developed in order to re-

duce maintenance requirements They are denoted by valve

regulated lead-acid (VRLA) or more commonly by sealed batteries

(SLA) Unlike the traditional lead-acid batteries they do not re-

quire upright orientation to prevent electrolyte leakage and do not

disperse gas during the charging cycle More recent versions of

lead-acid batteries can make 2800 cycles at 50 depth-of-dis-

charge (DOD) with a life time up to 17 years (Trojan Battery

Company 2013) Advanced lead-acid batteries made their ap-

pearance since 1970 both in the automotive and in the energy

sector The main innovation consists in adding ultracapacitors

composed of several layers in one or both electrodes (Pike Re-

search 2012) in order to improve performances and durability

Compared to the traditional lead-acid batteries they have longer

lifecycles higher charging and discharging ef 1047297ciency and a better

performance under partial state-of-charge (SOC) conditions They1047297nd applications in renewable power integration frequency re-

sponse and ramping

32 Lithium-ion

The main advantages of Li-ion batteries are the high energy

density (80 ndash 200 W hkg) the high power densities the high

roundtrip ef 1047297ciencies (90 ndash 95) and the long lifecycles Conversely

they still have high costs and important safety problems although

companies are currently conducting research in order to reduce

these drawbacks They offer good characteristics both in power

and energy applications and are extensively used for back-up ap-

plications frequency regulation utility grid-support applications

energy management and renewable energy 1047297rming The mostcommon electrochemistries are lithium cobalt oxide lithium iron

phosphate lithium manganese spinel lithium nickel cobalt alu-

minum and lithium nickel manganese cobalt

33 Flow batteries

Flow batteries consist of two separate tanks that contain two

electrolyte solutions circulating in two independent loops The

external tanks can be sized according to the needs of the user

When connected to a load the migration of electrons from the

negative to positive electrolyte solution creates a current The

main advantages are the long service life the powerenergy design

1047298exibility (the power rating is independent of the energy storage

rating due to the separation between the electrolyte and the

battery stack) the layout 1047298exibility the low standby losses and the

simple cell management The main drawbacks are the relative high

cost the parasitic losses (due to the pump working) and the wide

layout areas The most mature 1047298ow battery technologies are va-

nadium redox and zinc-bromine batteries The discharge duration

oscillate from 2 to more than 8 h

34 Zinc-air batteries

Zinc-air battery is a metal-air electrochemical cell technology Zinc-

air batteries are energized only when the atmospheric oxygen is ab-

sorbed into the electrolyte through a membrane Zinc-air batteries are

non-toxic non-combustible and potentially inexpensive to produce

They have higher energy density than other type of batteries (since

the atmospheric air is one of the battery reactants) and have a long

shelf life Conversely they are sensitive to extreme temperature and

humid conditions Anyway the technology remains unproven in

widespread commercial deployment

35 High temperature batteries

High temperature batteries include two main technologies NaS

battery and sodium-nickel-chloride battery (also known as ZEBRA

battery) Both use an electrolyte solution based on molten salts

and therefore need to operate at high temperatures (from 300 degC

to 360 degC) Electric heaters are used to reach the operating tem-

perature during the start-up while the same temperature is

maintained by the joule losses during the normal operation

NaS battery is a relative mature technology The electrochemistry

consists of liquid sulphur and sodium separated by an electrolyte in

the form of solid ceramic (beta alumina) NaS batteries 1047297nd applica-

tions in renewable power integration TampD grid support and load le-

veling applications Originally thy were developed for electric vehicleapplications In the last 20 years the technology was modi1047297ed by

TEPCO (Tokyo Electric Power Company) and by the company NGK

Insulators for the electricity market

NaS batteries have a limited cycle life (1500 ndash 3000 cycles) high

energy density (150 ndash 250 W hkg) and medium charge and dis-

charge ef 1047297ciencies (75 ndash 90) Conversely they have some safety

problems due to the high operating temperature NaS batteries are

generally used for long discharge periods lasting 6 h or even

longer

4 Economic analysis

The economic analysis is carried out by calculating the cumu-

lated cash 1047298ow the NPV and the IRR of the investment for each

Fig 4 Split of small-size battery projects by application in Italy (operational announced under construction)




BESS technologyThe cash 1047298ow C t generated in the generic year t can be ex-

pressed by

sum = minus ( )C P C 1t t i

i t

where P t is the customer bene1047297t in year t and sum C i i t is the sum of

all the BESS costs including the initial capital and replacement

costs and the OampM costs

The customer savings depend on the battery parameters onthe BESS operation mode on the demand charges and on the gap

between high and low electricity prices The yearly customer

bene1047297t can be expressed as the sum of all the daily savings P d

sum=( )=

P P 2

t

d

d

1

365

The daily savings are composed by two separate components

proportional to the consumed energy and to the maximum power

draw respectively

sum Δ= prime minus = ( prime minus ) +

( )=P C C c E E

c P

N

3d E d E d

h h d h d h d

kW

month

1

24

wherec h d is the electricity cost in hour h of the day d ( eurokW h-day)c kW is the demand charge Typically demand charges are ap-

plied to the maximum demand during a given month hence units

are eurokW-month

ΔP is the reduction in the maximum power draw during a gi-

ven month resulting from the BESS operation (kW-month)

N month is the number of days in a monthprimeE h d E h d are the hourly userrsquos consumptions with and without

storage respectivelyprimeC E d C E d are the daily customer electricity bills with and without

storage respectively

The demand charge component is always present in the elec-

tricity bill of commercial and industrial consumers and it is cal-

culated based on the peak electricity demand during the billingperiod Demand charges are applied by utilities as a way to cover

the 1047297xed cost of electricity provision providing an incentive to

commercial and industrial consumers to reduce their peak

consumption

The total BESS cost is usually decomposed into three different

components

ndash initial capital cost of DC components (battery cost)

ndash initial capital cost of AC components (Power Conversion System

- PCS cost)

ndash initial other owners costs (Balance Of Plant - BOP costs)

The total BESS cost C TOT expressed in terms of BESS capacity is

( )= + + = + + sdot ( )C C C C C C C C 4TOT PCS STOR BOP PCS u STORu BOP u BESS

where

C PCS C STOR C BOP are the PCS the storage and the BOP costs of the

BESS respectively

C PCS u C STOR

u C BOP u are the PCS the storage and the BOP per unit

costs respectively

C BESS is the BESS capacity (in kW h)

After calculating all the costs and all the pro1047297ts the discounted

cash 1047298ow C t is calculated by

= ( + ) ( )C C j 1 5t t t

where j is the weighted average cost of capital (WACC)

Finally the NPV and IRR indexes are calculated according to

(Telaretti and Dusonchet 2014)

In the calculations the following assumptions are made

ndash the project life of all kind of BESS is 10 years and the simulations

are carried out assuming a 10 years reference period (the BESS

replacement costs are neglected)

ndash the annual electricity price escalation rate is neglected

ndash the WACC is assumed equal to 3

ndash the use of the storage device does not in1047298uence the price of

electricity in the energy market ndash the battery performs a full chargingdischarging cycle per day

with a DODfrac1480

ndash at the end of each chargedischarge cycle the battery returns to

the initial SOC Doing so the battery energy constraint is auto-

matically satis1047297ed ie the storage level cannot exceed the rated

energy capacity of the device at any time

In addition to the above mentioned hypotheses the battery

self-discharge is disregarded and the battery capacity is assumed

constant throughout the battery life without degradation

5 Case study

The case study focuses on a commercial property a food su-

permarket located in climatic zone E (RDS 2008) The bene1047297t of

using BESS in load shifting applications is obtained estimating the

hourly power diagram of the facility The latter is shown in Fig 5

in winter summer and shoulder seasons for weekdays Sunday

and public holidays respectively

The commercial facility is billed through a two-hourly elec-

tricity tariff structured as follows

= = ( )C C 0 3euro kWh 0 15euro kWh 6F F 1 2

ndash on-peak hours (F1) Monday ndash Friday from 800 am to 700 p

m ndash off-peak hours (F2) Monday- Friday from 700 pm to 800 a

m all day Saturday Sunday and holidays

The electricity costs C F 1 C F 2 include all components and taxes

The demand charges are assumed equal to

= ( )C 50 eurokWyear 7kW

The economical evaluations are carried out assuming that the

BESS is operated only on weekdays (around 250 days per year)

The BESS has been sized in order to maximize the load shifting

bene1047297t for the customer partially offsetting the power diagram

when the electricity prices are the highest (through the battery

discharge) while increasing it in the off-peak periods (through the

battery charging) The optimum condition will be achieved if thebattery is sized so as to completely smooth the customer power

diagram in the day of the year corresponding to the 1047298attest power

pro1047297le consistent with the chargingdischarging constraints and

with the need to charge during off-peak periods and discharge

during on-peak times Under this sizing assumption the storage

will be able to completely level the customer power diagram in the

1047298attest daily usage pattern (assumed coincident with the shoulder

seasonsweekdaysrsquo daily power pro1047297le) while it will produce a

peak shaving effect in all other days As a consequence of this

statement the power 1047298ow will always be directed from the grid to

the load and the stored energy will only be used for load com-

pensation without selling to the utility

Fig 6 a and b shows the hourly power diagrams of the food

supermarket with and without BESS and the BESS power pro1047297le




in shoulder seasonsweekdays and summerweekdays respec-

tively under the above mentioned sizing conditions

Fig 6a shows that the facility power diagram is 1047298attened in

shoulder seasons except from 700 to 900 pm since the BESS is

not allowed to discharge in the off-peak hours Otherwise in

summer seasons (Fig 6b) the BESS only produces a peak shavingeffect on the facility power pro1047297le notwithstanding the power

peak between 700 and 900 pm

The facility power diagrams when the storage is added and the

corresponding BESS power pro1047297les for each reference seasonal

period are reported in Fig 7a and b respectively

It is worth noting that the power peaks could have been

avoided if the billing period had been chosen according to the

hourly facility power pro1047297le Such a result would be obtained if the

off-peak hours were from 900 pm to 800 am as shown in

Fig 8 The power pro1047297le in shoulder seasonsweekdays is indeed

perfectly 1047298attened is in this case

Table 1 shows the main operational parameters and the cost of

components for each BESS technology The BESS costs are updated

to 2015 and derived from (Lazard 2015)

As shown in Table 1 a range of min-max investment and re-

placement costs is considered for each electrochemical technology

and the economic indexes are calculated for each extreme value

Furthermore based on the capital cost decrease for each BESS

technology estimated in the next 1047297ve years (shown in Table 2)

(Lazard 2015 IRENA 2015) the NPV and IRR are recalculatedassuming the new cost indicators The simulation results are

summarized in the next Section

6 Simulations results

Fig 9a and b shows a comparison of minmax NPV and IRR

values respectively for the different electrochemical technologies

The diagrams show the values of the economic indexes referred

both to 2015 and 2020 BESS prices The following important

considerations are derived

ndash at the current BESS prices none of the considered electro-

chemical technologies is cost effective Zinc-based Li-ion and

Fig 5 Hourly power diagram of the food supermarket in winter summer and shoulder seasons for weekdays Sunday and public holidays

Fig 6 Hourly power diagram of the food supermarket with and without BESS and BESS power pro1047297le a) in shoulder seasons - weekdays b) in summer - weekdays




1047298ow batteries approach the break-even point (at their maximum

NPV and IRR values)

ndash in 2020 some electrochemical technologies will already be af-

fordable for electric bill management applications even without

incentives The Li-ion technology will be the most convenient

technology in 2020 essentially thanks to the sharp cost decrease

expected in the coming years (see Table 2) Also 1047298ow batteries

will be cost effective but at a lesser extent than the Li-ion

technology

ndash advanced lead-acid and NaS batteries seem to be less con-

venient This is essentially due to the relative high cost of both

technologies NaS battery is a relative mature technology and

the expected cost reduction is limited Otherwise advanced

lead-acid battery yet has room for improvement in terms of

performances and lifetime and a greater reduction of costs is

expected

ndash zinc based battery approaches the break-even point in both

Fig 7 (a) Facility power diagram when the storage is operated (b) corresponding BESS power pro 1047297le for each of the reference seasonal periods

Fig 8 Facility power diagram when storage is added and the billing period is chosen according to the hourly facility power pro 1047297le

Table 1

Operational parameters and cost components for each BESS technology

Zinc based battery Li-ion battery Lead-acid battery Flow battery NaS battery

min max min max min max min max min max

Energy c apa ci ty (MW h ) 2 6

Power rating (kW) 500

N cycle per year 250

DOD per cycle () 80

Project life (years) 10

Chargedischarge eff () 72 80 91 93 86 86 72 77 75 76

C uSTOR ( eurokW h) 220 375 290 971 508 1750 223 910 380 1230

C uPCS ( eurokW h) 54 54 54 54 54 54 54 54 54 54

C uBOP ( eurokW h) 41 64 51 153 85 270 42 145 65 193

OampM costs ( eurokW h) 45 125 45 125 134 518 36 277 982 295

Table 2

Estimated capital cost decreases (2015 ndash 2020) (Lazard 2015 IRENA 2015)

Zinc based

battery

Li-ion

battery

Lead-acid

battery

Flow

battery

NaS

battery

5-year capital

cost decrease

5 47 24 38 65




situations (2015 and 2020) This is essentially due to its poten-

tially low cost thanks to the abundance of the primary metal

However this technology remains currently unproven in wide-

spread commercial deployment

A parametric analysis is further carried out in order to evaluate

the in1047298uence of the two separate components of the electricity bill

on the breakeven point for each BESS technology The analysis is

performed under two different assumptions a) varying the

Fig 9 Comparison of (a) NPV - (b) IRR values in 2015 and 2020 for the different electrochemical technologies

Fig 10 IRR values versus electricity price ratio for the different electrochemical technologies

Fig 11 IRR values versus peak demand charge ratio for the different electrochemical technologies




difference between high and low electricity prices b) varying the

peak demand charges

The following two indices have been de1047297ned

=( )

k C

C 8F

F

1

2

= ( )h C

C 9kW

h

kW

where k is the electricity price ratio h is the peak demand chargeratio C kW

h is the parametric value of the peak demand charges and

C kW the reference value de1047297ned in (7) In other words the differ-

ence between maximum and minimum electricity prices (elec-

tricity prices ratio) is assumed variable according to the k index

The peak demand charges are assumed variable according to the h

index

Figs 10 and 11 show the IRR for different values of k and h

indexes respectively Peak demand charge reductions have been

calculated assuming a power pro1047297le perfectly 1047298attened as shown

in Fig 8

It is important to remark that zinc-based Li-ion and 1047298ow bat-

teries appear once again the most convenient electrochemicaltechnologies for load shifting applications Advanced lead acid and

NaS batteries do not approach the breakeven point even when the

electricity price ratio and the peak demand charge ratio take the

highest values Furthermore the IRR value appears to be more

sensitive to the electricity price ratio rather than the peak demand

charge ratio This is essentially because the energy component has

a greater impact on the electricity bill than the power component

7 Conclusion and policy implications


tery systems from the point of view of the electricity customer The

analysis refers to a Li-ion an advanced lead-acid a zinc-based aNaS and a 1047298ow battery The total investment and replacement

costs are estimated in order to calculate the cumulated cash 1047298ow

the NPV and the IRR of the investment A parametric analysis is

further carried out under two different assumptions a) varying

the difference between high and low electricity prices b) varying

the peak demand charges

The analysis reveals that some electrochemical technologies are

more suitable than others for electric bill management applica-

tions and that at the current BESS prices none of the considered

electrochemical technologies is cost effective Zinc-based Li-ion

and 1047298ow batteries appear to be the most convenient (thanks to the

higher values of NPV and IRR indexes) Conversely advanced lead-

acid and NaS batteries seem to be less convenient essentiallybecause of the relative high cost of both technologies The analysis

also reveals that in 2020 some electrochemical technologies will

already be affordable for electric bill management applications

even without subsidies The Li-ion technology will be the most

convenient technology in 2020 essentially thanks to the sharp

cost decrease expected in the coming years

The parametric analysis also reveals that a pro1047297t for the cus-

tomer can be reached only with a signi1047297cant difference between

high and low electricity prices or when high peak demand charges

are applied

The results of the present paper highlight the need to foster the

reduction of storage costs in order to make more pro1047297table the

use of BESS in load shifting applications The reduction of storage

costs will be made possible only de1047297ning new rules in the electricregulatory policy and introducing support measures for the de-

velopment of BESS such as capital subsidies tax credit etc Some

countries have already started to introduce supporting measures

for stationary energy storages such as Japan Germany and several

US states The results of the present paper will allow to gain an

insight into the future of possible energy policies in the storage

sector and to predict how the storage market could evolve in

different countries In a future work the authors will extend the

technical economic analysis to an active electricity customer

(prosumer) equipped with RES plants such as PV or wind energy

The bene1047297t for the end-user will be evaluated in presence of

1047298exible electricity tariffs under the assumption that the energy

1047298ows in both directions

Appendix A

See Appendix Table A1

Table A1

-Description of energy storage applications according to the DOE database

B lack Start A b la ck sta rt is the p rocess of restori ng a p ower sta tion to opera ti on without r elying on the ex terna l electri c power

transmission network

Distributed upgrade due to solar Use of a relatively small amount of modular storage to a) defer the need to replace or to upgrade existing distribution

equipment or b) to increase the equipments existing service life (life extension) in presence of a high penetration of

PV energy in the power grid

Distributed upgrade due to wind Use of a relatively small amount of modular storage to a) defer the need to replace or to upgrade existing distribution


wind energy in the power grid

Electric Bill Management Energy storage used by end-use customers in a variety of facets to reduce electric bills

Electric Bill Management with Renewables Energy storage used by end-use customers in a number of facets and in conjunction with renewable generation re-

sources to reduce electric bills

Electric Energy Time Shift Energy time shift involves storing energy during low price times and discharging during high price times

Electric Supply Capacity Depending on the circumstances in a given electric supply system energy storage could be used to defer andor to

reduce the need to buy new central station generation capacity andor to lsquorentrsquo generation capacity in the wholesale

electricity marketplace

Electric Supply Reserve Capacity - Non-

Spinning

Generation capacity that may be of 1047298ine or that comprises a block of curtailable andor interruptible loads and that can

be available within 10 min Unlike spinning reserve capacity non-spinning reserve capacity is not synchronized with

the grid (frequency) Non-spinning reserves are used after all spinning reserves are online

Electric Supply Reserve Capacity - Spinning Generation capacity that is online but unloaded and that can respond within 10 minutes to compensate for generation

or transmission outages lsquoFrequency-responsiversquo spinning reserve responds within 10 seconds to maintain system

frequency Spinning reserves are the 1047297rst type used when a shortfall occurs

Frequency Regulation Frequency regulation involves moment-to-moment reconciliation of the supply of electricity and the demand for

electricity The reconciliation is done every few seconds

Grid Connected Commercial (Reliability amp The electric reliability application entails use of energy storage to provide highly reliable electric service In the event of




References

ABB 2013 ABB to build a battery energy storage system in Italy langhttpwwwabbcomcawpseitp2028c2b9149039d2d0ec1257b5200331466aspxrang (accessed210116)

Bueno PG Hernaacutendez JC Ruiz-Rodriguez FJ 2016 Stability assessment fortransmission systems with large utility-scale photovoltaic units IET Ren PowerGen 14

Campoccia A Dusonchet L Telaretti E Zizzo G 2008 Financial measures forsupporting wind power systems in Europe a comparison between green tagsand feedrsquoin tariffs In Proceedings of IEEE Power Electronics Electrical DrivesAutomation and Motion (SPEEDAM) Ischia Italy pp 1149 ndash 1154

Campoccia A Dusonchet L Telaretti E Zizzo G 2009 Economic impact of icethermal energy storage systems in residential buildings in presence of double-tariffs contracts for electricity In Proceedings of the International Conferenceon the European Energy Market (EEM) Leuven Belgium pp 1 ndash 5

Cataliotti A Russotto P Di Cara D Telaretti E Tinegrave G 2013 New measurementprocedure for load 1047298ow evaluation in medium voltage smart grids In Pro-ceedings of the IEEE Instrumentation and Measurement Technology Conference(IMTC) pp 1 ndash 6

Divya KC Oslashstergaard J 2009 Battery energy storage technology for power sys-tems ndash an overview Electr Power Syst Res 79 (4) 511 ndash 520

Dufo-Lopez R Bernal-Agustin JL Dominguez-Navarro JA 2009 Generationmanagement using batteries in wind farms economical and technical analysisfor Spain Energy Policy 37 (1) 126 ndash 139

Ekman CK Jensen SH 2010 Prospects for large scale electricity storage inDenmark Energy Conv Manag 51 (6) 1140 ndash 1147

ENEL 2012 ENEL Storage Test Facility langhttpwwwder-labnetdownloadsenel-storage-test-facilitypdf rang (accessed 210116)

ENEL 2013 Loccioni and Samsung SDI with ENEL to develop innovative storagesystems langhttpwwwinformazioneitc68A1F97d-0F9C-45BCE-81C5-532049F32D28Loccioni-and-Samsung-SDI-with-ENEL-to-develop-innovative-

storage-systems-Thanks-to-RCube-more-intelligence-security-and-ef 1047297ciency-

for-the-gridrang (accessed) 210116)ENEL 2014 Island Energy Storage an Enel First langhttpswwwenelcomen-GBPa

gesmedianewsdetailaspxidfrac14357rang (accessed 210116)Falvo MC Martirano L Sbordone D Ippolito MG Telaretti E Zizzo G Bertini

I Di Pietra B Graditi G Pelligra B 2015 A comparison of two innovativecustomer power devices for Smart Micro-Grids In Proceedings of IEEE Inter-

national Conference on Environment and Electrical Engineering (EEEIC) RomeItaly pp 1504 ndash 1509

Favuzza S Galioto G Ippolito MG Massaro F Milazzo F Pecoraro G Sanse-

verino ER Telaretti E 2015 Real-time pricing for aggregates energy re-sources in the Italian energy market Energy 87 251 ndash 258

Graditi G Ippolito MG Rizzo R Telaretti E Zizzo G 2014 Technical-eco-

nomical evaluations for distributed storage applications an Italian case studyfor a medium-scale public facility In Proceedings of the Renewable Power

Generation Conference (RPG) Naples Italy pp 1 ndash 7Graditi G Ippolito MG Telaretti E Zizzo G 2016 Technical and economical

assessment of distributed electrochemical storages for load shifting applica-

tions an Italian case study Renew Sustain Energy Rev 57 515 ndash 523IGreenGrid 2016 ISERNIA Projec 2016 langhttpwwwigreengrid-fp7euitalyrang (ac-

cessed 210116)Ippolito MG Telaretti E Zizzo G Graditi G 2013 A New Device for the Control

and the Connection to the Grid of Combined RES-Based Generators and Electric

Storage Systems In Proceedings of IEEE International Conference on CleanElectrical Power (ICCEP) Alghero Italy pp 262 ndash 267

Ippolito MG Telaretti E Zizzo G Graditi G Fiorino M 2014a A bidirectional

converter for the Integration of LiFePO4 Batteries with RES-based Generators

Part I Revising and 1047297nalizing design In Proceedings of the Renewable PowerGeneration Conference (RPG) Naples Italy pp 1 ndash 6

Ippolito MG Telaretti E Zizzo G Graditi G Fiorino M 2014b A bidirectionalconverter for the Integration of LiFePO4 Batteries with RES-based Generators


Ippolito MG Favuzza S Sanseverino ER Telaretti E Zizzo G 2015 Economic

Table A1 (continued )

Q ua lity) a c omplete p ower outage l asti ng mor e than a few seconds the storage system pr ovid es enough energy to a ) ri de

through outages of extended duration or b) to complete an orderly shutdown of processes c) transfer to on-site

generation resources The electric power quality application involves use of energy storage to protect loads down-

stream against short duration events which affect the quality of power delivered to the load

Grid-Connected Residential (Reliability) The electric reliabilityapplication entails use of energy storage to provide highly reliable electric service In the event of

a complete power outage lasting more than a few seconds the storage system provides enough energy to a) ride


generation resources

Load Following Load following resourcesrsquo output changes in response to the changing balance between electric supply (primarilygeneration) and end user demand (load) within a speci1047297c region or area over timeframes ranging from minutes to a

few hours

On-sit e Po wer Energy storage prov ides power on-site whe n the grid is no t energized

Onsite Renewable Generation Shifting Energy storage to perform renewables energy time-shifting for end-use customers that generate renewable power

onsite

Ramping Changing the loading level of a generating unit in a constant manner over a 1047297xed time (eg ramping up or ramping

down) Such changes may be directed by a computer or manual control

Renewable Capacity Firming Use of storage to mitigate rapid output changes from renewable generation due to a) wind speed variability affecting

wind generation and b) shading of solar generation due to clouds It is important because these rapid output changes

must be offset by other ldquodispatchablerdquo generation

Renewable Energy Time-shift Centralized or distributed Electric Energy Time Shifting speci1047297cally related to the uncontrollable nature of renewable

generation

Stationary TampD Upgrade Deferral The TampD Upgrade Deferral bene1047297t is related to the use of a relatively small amount of modular storage to a) defer the

need to replace or to upgrade existing TampD equipment or b) to increase the equipments existing service life (life

extension)

Transmission Congestion Relief In this application storage systems are installed at locations that are electrically downstream from the congested

portion of the transmission system Energy is stored when there is no transmission congestion and discharged (duringpeak demand periods) to reduce transmission capacity requirements

Transmission Support Energy storage used for transmission support improves TampD system performance by compensating for electrical

anomalies and disturbances such as voltage sag unstable voltage and sub-synchronous resonance

Transmission upgrades due to solar Use of a relatively small amount of modular storage to a) defer the need to replace or to upgrade existing transmission



Transmission upgrades due to wind Use of a relatively small amount of modular storage to a) defer the need to replace or to upgrade existing transmission



Transportable TampD Upgrade Deferral In addition to what said for Stationary TampD Upgrade Deferral transportable systems can be moved to where they are

needed most on the grid

Voltage Support The purpose of voltage support is to offset reactive effects so that grid system voltage can be restored or maintained

Demand response Changes in electric usage by end-use customers from their normal consumption patterns in response to changes in the

price of electricity over time or to incentive payments designed to induce lower electricity use at times of high

wholesale market prices or when system reliability is jeopardized

Resiliency Ability of an energy system to tolerate disturbances and to continue to deliver affordable energy services to consumers

Tra nsportation Ser vic es Energy storage u sed in tra nsportation a pp li ca ti ons




feasibility of a customer-side energy storage in the Italian electricity market InProceedings of IEEE International Conference on Environment and ElectricalEngineering (EEEIC) Rome Italy pp 1 ndash 6

IRENA 2015 Battery storage for renewables market status and technology outlookInternational Renewable Energy Agency langhttpwwwirenaorgdocumentdownloadspublicationsirena_battery_storage_report_2015pdf rang (ac-cessed 210116)

LLazard 2015 Lazards levelized cost of storage analysis -Version 10 November2015 langhttpswwwlazardcommedia2391lazards-levelized-cost-of-storage-analysis-10pdf rang (accessed 210116)

Loccioni 2016 Home page langhttpwwwloccionicomrang (accessed 210116)

NEC 2014 NEC successfully commissions largest renewable energy storage systemin Italy langhttpwwwneccomenpress201404global_20140402_01htmlutm_sourcefrac14EnergythornStoragethornReportamputm_campaignfrac14e1ec3ae259-ESR_2_10_1210_2_2012amputm_mediumfrac14emailamputm_termfrac140_bd57f7e9aa-e1ec3ae259-80843329rang (accessed 210116)

NGK Insulators 2013 NGK and Italian TSO (Terna) came to an agreement for supplyof NAS battery system langhttpwwwngkcojpenglishnews20130514htmlrang(accessed 210116)

Pecoraro G Favuzza S Ippolito MG Galioto G Sanseverino ER Telaretti EZizzo G 2015 Optimal pricing strategies in real-time electricity pricing en-vironments an Italian case study In Proceedings of IEEE International Con-ference on Clean Electrical Power (ICCEP) Taormina Italy pp 376 ndash 381

Pike Research 2012 Advanced lead-acid batteries Research report langhttpwwwnavigantresearchcomwp-contentuploads201212ALAB-12-Executive-Summarypdf rang (accessed 210116)

RDS 2008 Contributo delle elettrotecnologie per usi 1047297nali al carico di puntaECORETworkpackage 1 (PRECA)milestone 12 (CAREL) Ricerca di Sistema pp1 ndash 90

SAFT batteries 2013 SAFT to deliver high power li-ion energy storage system toSAET to support renewable integration in ENEL rsquos Italian distribution networklanghttpwwwsaftbatteriescompresspress-releasessaft-deliver-high-power-li-ion-energy-storage-system-saet-support-renewablerang (accessed 210116)

Sandia 2010 Energy storage for the electricity grid bene1047297ts and market potentialassessment guide Rep SAND2010-0815 langhttpwwwsandiagovesspublica

tionsSAND2010-0815pdf rang (accessed 210116)Sandia 2016 DOE global energy storage database langhttpwwwen

ergystorageexchangeorgapplicationglossaryrang (accessed 210116)Shcherbakova A Kleit A Cho J 2014 The value of energy storage in South

Koreas electricity market a Hotelling approach Appl Energy 125 93 ndash 102Siemens) 2014 Smart energy supply for the University Campus of Savona langhttps

w3siemenscomsmartgridglobalSiteCollectionDocumentsReferencesReference20Flyer20Microgrid20Savona_ePDFrang (accessed 210116)

Sioshansi R Denholm P Jenkin T Weiss J 2009 Estimating the value of elec-tricity storage in PJM arbitrage and some welfare effects Energy Econ 31 (2)269 ndash 277

Sutanto D Lachs WR 1997 Battery energy storage systems for sustainable en-ergy development in Asia Electr Power Syst Res 44 (1) 61 ndash 67

Telaretti E Dusonchet L 2014 Economic analysis of support policies in photo-voltaic systems a comparison between the two main european markets InGill MA (Ed) Photovoltaics Synthesis Applications and Emerging Technol-ogies Nova Science Publishers Inc Hauppauge New York pp 73 ndash 90

Telaretti E Dusonchet L Massaro F Mineo L Pecoraro G Milazzo F 2014 Asimple operation strategy of battery storage systems under dynamic electricitypricing An Italian case study for a medium-scale public facility In Proceedingsof the Renewable Power Generation Conference (RPG) Naples Italy pp 1 ndash 7

Telaretti E Dusonchet L Ippolito M 2015 A simple operating strategy of small-scale battery energy storages for energy arbitrage under dynamic pricing tariffsEnergies 9 (1) 1 ndash 20

Terna Storage 2016 langhttpswwwternaiten-gbaziendachisiamoternastorageaspxrang (accessed 210116)

Trojan Battery Company 2013 Off-grid Commercial Microgrid System ProvidesEnergy Storage for Resort in India ARErsquos Storage Workshop Intersolar Europelanghttpwwwruralelecorg1047297leadminDATADocuments07_EventsInter-

solar_Europe_20132013-06-20_6_ARE_presentation_Spice_Village_-Commercial_Microgrid_project_Trojan _Batterypdf rang (accessed 210116)Walawalkar R Apt J Mancini R 2007 Economics of electric energy storage for

energy arbitrage and regulation in New York Energy Policy 35 (4) 2558 ndash 2568Wikipedia 2015 SantrsquoAlberto Solar Park langhttpsenwikipediaorgwikiSant27Al

berto_Solar_Parkrang (accessed 210116)




bene1047297ts related to ancillary services bene1047297ts related to grid system applications

A description of energy storage applications according to the De-

partment of Energy (DOE) database is reported in Table A1 of Ap-

pendix A (Sandia 2016) In all these applications custom devices need

to be used to ensure a proper interconnection and a reliable control

system according to national technical speci1047297cations (Ippolito et al

2013 Falvo et al 2015 Ippolito et al 2014a 2014b Cataliotti et al

2013)

Among many applications ESSs can also be used to store electricity

during low-price hours when the demand is low and to meet the

demand during peak hours thus leading to savings for the consumer

This application also known as Time-of-Use (TOU) energy cost man-

agement could yield major bene1047297ts including a reduced need for

peak generation (particularly from expensive peaking plants) and re-

duced charge on transmission and distribution (TampD) systems


tery systems from the point of view of the electricity customer

The analysis refers to a lithium ion (Li-ion) an advanced lead-acid a zinc-based a sodium-sulphur (NaS) and a 1047298ow battery The

case study focuses on a commercial facility a food supermarket

located in climatic zone E (RDS 2008)

The total investment and replacement costs are estimated in order

to calculate the cumulated cash 1047298ow the net present value (NPV) and

the internal rate of return (IRR) for the battery energy storage systems

(BESSs) used in load shifting applications A range of updated invest-

ment and replacement costs is considered for each electrochemical

technology and the economical evaluations are repeated for each

extreme value (minimum and maximum) Furthermore based on the

capital cost decrease for each BESS technology estimated in the next

1047297ve years the economic indicators are recalculated and 1047297nal con-

siderations are presented As a further step a parametric analysis is

carried out under two different assumptions a) varying the differencebetween high and low electricity prices b) varying the peak demand

charges The analysis reveals that some electrochemical technologies

are more suitable than others for electric bill management applica-

tions and that a pro1047297t for the customer can be reached only with a

signi1047297cant difference between high and low electricity prices or when

high peak demand charges are applied Simulation results also show

how the facility power pro1047297le varies as a consequence of the storage

operation

The remainder of the paper is organized as follows Section 2 de-

scribes the state-of-the art in the electrochemical storage sector Sec-

tion 3 provides an overview of stationary electrochemical technolo-

gies Section 4 describes the economic formulation and the opera-

tional assumptions Section 5 presents the case study showing the

seasonal power pro1047297les with and without storage contribution

Section 6 describes the simulation results Finally Section 7 sum-

marizes the conclusion of the work

2 State-of-the art

The evaluation of the economic feasibility of a storage system

has been addressed by several authors in the literature Wala-

walkar et al (2007) considered a NaS battery for arbitrage and

1047298ywheels for frequency control in the New York (NY) City region

The analysis indicates that both energy storage technologies have

a high probability of positive NPV for both energy arbitrage and

regulation Sioshansi et al (2009) analyzed the arbitrage value of a

price-taking storage device in the US during a six-year period

from 2002 to 2007 to understand the impact of fuel prices

transmission constraints ef 1047297ciency storage capacity and fuel mix

Dufo-Lopez et al (2009) found that the selling price of the energy

provided by the batteries during peak hours should be between

022 and 066 eurokW h in order to gain the arbitrage breakeven

point of a wind ndash battery system installed in Spain Campoccia et al(2009) evaluate the effects of the installation of ice thermal ESSs

for cooling on the power daily pro1047297le of residential buildings and

examine the economic repercussions on the electricity billing

Ekman and Jensen (2010) analyzed a number of large scale elec-

tricity storage technologies concluding that the possible revenues

from arbitrage on the Danish spot market are signi1047297cantly lower

than the estimated costs of purchasing an electricity storage sys-

tem regardless of the storage technology

Shcherbakova et al (2014) simulated the operation of small

storage devices in South Korea showing that the present market

conditions do not provide suf 1047297cient economic incentives for en-

ergy arbitrage using NaS or lithium-ion (Li-ion) batteries Telaretti

et al (2014) described the application to a medium-scale public

facility of a simple BESS operating strategy which aims to max-imize the arbitrage customer savings highlighting the variation of

the power pro1047297le as a result of the proposed charging strategy The

battery operating strategy has been further expanded and gen-

eralized in Telaretti et al (2015)

Graditi et al (2014) and Graditi et al (2016) have recently eval-

uated the economic viability of using a Li-ion a NaS and a vanadium

redox battery (VRB) for TOU applications at a consumer level when

1047298exible electricity tariffs are applied A parametric analysis is also

performed by changing the capital cost of the batteries and the dif-

ference between the maximum and the minimum electricity price

revealing that the use of BESSs for TOU applications can be econom-

ically advantageous for a medium-scale public institution facility only

if there is a signi1047297cant difference between maximum and minimum

electricity prices Ippolito et al (2015) evaluated the economic viability

Nomenclature

BESS battery energy storage system

BOP balance of plant

DOD depth-of-discharge

DOE department of energy

ESS energy storage system

HV high voltageIRR internal rate of return

Li-ion lithium-ion

LV low voltage

MV medium voltage

NaS sodium ndash sulphur

NY New York

NPV net present value

OampM operation and management

PCS power conversion system

PV photovoltaic

RES renewable energy source

SLA sealed batteries

SOC state-of-charge

TEPCO Tokyo electric power companyTOU time-of use

TSO transmission system operator

TampD transmission and distribution

VRB vanadium redox battery

VRLA valve regulated lead-acid

WACC weighted average cost of capital











ectively































































































































































sponse and ramping

32 Lithium-ion












33 Flow batteries













































longer

4 Economic analysis








pressed by


i t







sum=( )=

P P 2

t

d

d

1

365



draw respectively


( )=P C C c E E

c P

N

3d E d E d

h h d h d h d

kW

month

1

24



are eurokW-month











consumption


components



- PCS cost)




where


BESS respectively

C PCS u C STOR


costs respectively




= ( + ) ( )C C j 1 5t t t












with a DODfrac1480








5 Case study















































































NPV and IRR values)







technology







expected




Table 1







DOD per cycle () 80



C uSTOR ( eurokW h) 220 375 290 971 508 1750 223 910 380 1230

C uPCS ( eurokW h) 54 54 54 54 54 54 54 54 54 54

C uBOP ( eurokW h) 41 64 51 153 85 270 42 145 65 193


Table 2


Zinc based

battery

Li-ion

battery

Lead-acid

battery

Flow

battery

NaS

battery

5-year capital

cost decrease

5 47 24 38 65



















peak demand charges


=( )

k C

C 8F

F

1

2

= ( )h C

C 9kW

h

kW







index




in Fig 8

































are applied

















Appendix A


Table A1


















Spinning













References










































few hours



onsite







generation



extension)

























































ectively































































































































































sponse and ramping

32 Lithium-ion












33 Flow batteries













































longer

4 Economic analysis








pressed by


i t







sum=( )=

P P 2

t

d

d

1

365



draw respectively


( )=P C C c E E

c P

N

3d E d E d

h h d h d h d

kW

month

1

24



are eurokW-month











consumption


components



- PCS cost)




where


BESS respectively

C PCS u C STOR


costs respectively




= ( + ) ( )C C j 1 5t t t












with a DODfrac1480








5 Case study















































































NPV and IRR values)







technology







expected




Table 1







DOD per cycle () 80



C uSTOR ( eurokW h) 220 375 290 971 508 1750 223 910 380 1230

C uPCS ( eurokW h) 54 54 54 54 54 54 54 54 54 54

C uBOP ( eurokW h) 41 64 51 153 85 270 42 145 65 193


Table 2


Zinc based

battery

Li-ion

battery

Lead-acid

battery

Flow

battery

NaS

battery

5-year capital

cost decrease

5 47 24 38 65



















peak demand charges


=( )

k C

C 8F

F

1

2

= ( )h C

C 9kW

h

kW







index




in Fig 8

































are applied

















Appendix A


Table A1


















Spinning













References










































few hours



onsite







generation



extension)































































































































































sponse and ramping

32 Lithium-ion












33 Flow batteries













































longer

4 Economic analysis








pressed by


i t







sum=( )=

P P 2

t

d

d

1

365



draw respectively


( )=P C C c E E

c P

N

3d E d E d

h h d h d h d

kW

month

1

24



are eurokW-month











consumption


components



- PCS cost)




where


BESS respectively

C PCS u C STOR


costs respectively




= ( + ) ( )C C j 1 5t t t












with a DODfrac1480








5 Case study















































































NPV and IRR values)







technology







expected




Table 1







DOD per cycle () 80



C uSTOR ( eurokW h) 220 375 290 971 508 1750 223 910 380 1230

C uPCS ( eurokW h) 54 54 54 54 54 54 54 54 54 54

C uBOP ( eurokW h) 41 64 51 153 85 270 42 145 65 193


Table 2


Zinc based

battery

Li-ion

battery

Lead-acid

battery

Flow

battery

NaS

battery

5-year capital

cost decrease

5 47 24 38 65



















peak demand charges


=( )

k C

C 8F

F

1

2

= ( )h C

C 9kW

h

kW







index




in Fig 8

































are applied

















Appendix A


Table A1


















Spinning













References










































few hours



onsite







generation



extension)



















































pressed by


i t







sum=( )=

P P 2

t

d

d

1

365



draw respectively


( )=P C C c E E

c P

N

3d E d E d

h h d h d h d

kW

month

1

24



are eurokW-month











consumption


components



- PCS cost)




where


BESS respectively

C PCS u C STOR


costs respectively




= ( + ) ( )C C j 1 5t t t












with a DODfrac1480








5 Case study















































































NPV and IRR values)







technology







expected




Table 1







DOD per cycle () 80



C uSTOR ( eurokW h) 220 375 290 971 508 1750 223 910 380 1230

C uPCS ( eurokW h) 54 54 54 54 54 54 54 54 54 54

C uBOP ( eurokW h) 41 64 51 153 85 270 42 145 65 193


Table 2


Zinc based

battery

Li-ion

battery

Lead-acid

battery

Flow

battery

NaS

battery

5-year capital

cost decrease

5 47 24 38 65



















peak demand charges


=( )

k C

C 8F

F

1

2

= ( )h C

C 9kW

h

kW







index




in Fig 8

































are applied

















Appendix A


Table A1


















Spinning













References










































few hours



onsite







generation



extension)


























































































NPV and IRR values)







technology







expected




Table 1







DOD per cycle () 80



C uSTOR ( eurokW h) 220 375 290 971 508 1750 223 910 380 1230

C uPCS ( eurokW h) 54 54 54 54 54 54 54 54 54 54

C uBOP ( eurokW h) 41 64 51 153 85 270 42 145 65 193


Table 2


Zinc based

battery

Li-ion

battery

Lead-acid

battery

Flow

battery

NaS

battery

5-year capital

cost decrease

5 47 24 38 65



















peak demand charges


=( )

k C

C 8F

F

1

2

= ( )h C

C 9kW

h

kW







index




in Fig 8

































are applied

















Appendix A


Table A1


















Spinning













References










































few hours



onsite







generation



extension)

































































peak demand charges


=( )

k C

C 8F

F

1

2

= ( )h C

C 9kW

h

kW







index




in Fig 8

































are applied

















Appendix A


Table A1


















Spinning













References










































few hours



onsite







generation



extension)


















































References










































few hours



onsite







generation



extension)














































