Ageing-aware trading with Li-ion battery storage: Trade-off between short-term market profits and long-term degradation

Abstract

With the growing popularity of grid-connected battery energy storage systems (BESSs), their operators seek a deeper understanding of the link between trading strategies and asset degradation to consolidate their business case (BC). Therefore, this paper proposes a techno-economic framework to link ageing-aware trading strategies with an empirical ageing model of a Li-ion BESS used for state-of-health (SOH) estimation. An unbounded trading strategy is compared with strategies accounting for BESS ageing through constraints or cost-of-use (COU) in the objective function. Additionally, this article derives the weights for the COU, which depend on multiple stress factors affecting the calendar and cycle degradation of the ageing model. The subject of investigation is a 20 MW/10.85 MWh BESS traded in the 30-min DA market in the UK. The decision-making is based on a three-day rolling horizon optimisation model, repeated over a year. Finally, the BC of the BESS is evaluated by combining market profits along the lifetime until the EOL criterion is reached. The BC analysis provides information on which ageing-aware trading strategy achieves the highest annualised net present value (NPV). The numerical results suggest that trading with COU in the objective function outperforms the other strategies, and including a COU per cycle results in an increase of up to 21% of annualised NPV compared to an unbounded strategy. Furthermore, deriving a COU from installation or replacement costs leads to a non-optimal annualised NPV. Finally, the analysis highlights the importance of using the annualised NPV to compare results from BESS projects of different lifetimes.