Estimation of Internal Rate of Return for Battery Storage Systems with Parallel Revenue Streams: Cycle-Cost vs. Multi-Objective Optimisation Approach

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.

Technoeconomic Analysis for Biodegradable and Recyclable Paper Coated with Synthetic Ionic PBAT for Packaging Application

“…With a lower IRR, a longer time for return on investment is needed, a result of reduced profits owing to lower MSP. 38 In this analysis, the sensitivity of minimum selling prices to the recovery of the ionization solvent was investigated. Elevating the recovery rate and reintroducing the recycled solvent into the emulsification step reduce raw material costs and harness energy from solvent condensation.…”