Generation of Alternative Battery Allocation Proposals in Distribution Systems by the Optimization of Different Economic Metrics within a Mathematical Model

Abstract

Battery systems bring technical and economic advantages to electrical distribution systems (EDSs), as they conveniently store the surplus of cheap renewable generation for use at a more convenient time and contribute to peak shaving. Due to the high cost of batteries, technical and economic studies are needed to evaluate their correct allocation within the EDS. To contribute to this analysis, this paper proposes a stochastic mathematical model for the optimal battery allocation (OBA), which can be guided by the optimization of two different economic metrics: net present value (NPV) and internal rate of return (IRR). The effects of the OBA in the EDS are evaluated considering the stochastic variation of photovoltaic generation and load. Tests with the 33-node IEEE test system indicate that OBA results in voltage profile improvement (~1% at peak time), peak reduction (31.17%), increased photovoltaic hosting capacity (18.8%), and cost reduction (3.06%). Furthermore, it was found that the IRR metric leads to a different solution compared to the traditional NPV optimization due to its inherent consideration of the relation between cash flow and investment. Thus, both NPV and IRR-based allocation alternatives can be used by the decision maker to improve economic and technical operation of the EDS.

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

“…Ref. [21] report lower IRR values (6.49% and 7.02%) but rely on stochastic modelling rather than on real measurement data. However, in their analysis they advocate the use of MOO in order to optimise the potential trade-off regarding economic and technical aspects of BSS utilisation.…”

“…However, apart from research by [16] and, more recently, ref. [21] it is hard to find additional papers which made use of it.…”

The economic performance of mango integrated pest management practices at different scales of production

“…Among the weaknesses of the NPV is that it does not provide information about the initial investment. One project could have a higher NPV in comparison with another alternative but also have a larger investment, such that the NPV-to-investment ratio is high ( 40 ). Furthermore, NPV is very dependent on the discount rate.…”

Voltage regulation in low voltage distribution networks with unbalanced penetrations of photovoltaics and battery storage systems

“…This capacity was too small to have a large impact on the customers' demand during peaks. Another study by Martinez et al [6] determined that a residential BESS sizing strategy for a standard IEEE 33-node test system that optimises the BESS NPV can lead to peak demand reductions of 31%. Ordonez et al [7] carried out a study on the profitability of self-consumption by residential prosumers in Ecuador and Spain under net-metering and net-billing schemes.…”

“…Another study by Martinez et al. [6] determined that a residential BESS sizing strategy for a standard IEEE 33‐node test system that optimises the BESS NPV can lead to peak demand reductions of 31%. Ordonez et al.…”