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Estimation of Internal Rate of Return for Battery Storage Systems with Parallel Revenue Streams: Cycle-Cost vs. Multi-Objective Optimisation Approach.
- Source :
-
Energies (19961073) . Aug2022, Vol. 15 Issue 16, p5859-N.PAG. 17p. - Publication Year :
- 2022
-
Abstract
- This paper assesses the profitability of battery storage systems (BSS) by focusing on the internal rate of return (IRR) as a profitability measure which offers advantages over other frequently used measures, most notably the net present value (NPV). Furthermore, this study proposes a multi-objective optimisation (MOO) approach to IRR estimation instead of relying on the simple linear optimisation and compares the results to the popular linear optimisation with battery cycle-cost penalty. The analysis is conducted under perfect foresight conditions by considering multiple revenue streams: arbitrage trading in the day-ahead and intraday markets, peak shaving, participating in the primary reserves market, and from photovoltaic (PV) power-generation unit. Data are collected for the German power market for 2017 and 2021. The results show that MOO approach yields similar IRR estimates to the cycle-cost model in 2017. However, higher market volatility and increased electricity prices in 2021 resulted in tangible differences. The analysis shows that, if such conditions are coupled with a low battery capacity price, the MOO method significantly outperforms the cycle-cost model. The effects of battery calendar lifetime and state of charge which decrease profitability are also considered. Nevertheless, a noticeable rise in profitability in 2021 relative to 2017 could provide enough compensation to address the issue of relatively poor viability track record. [ABSTRACT FROM AUTHOR]
Details
- Language :
- English
- ISSN :
- 19961073
- Volume :
- 15
- Issue :
- 16
- Database :
- Academic Search Index
- Journal :
- Energies (19961073)
- Publication Type :
- Academic Journal
- Accession number :
- 158805630
- Full Text :
- https://doi.org/10.3390/en15165859