Effect of Battery Degradation on Multi-Service Portfolios of Energy Storage

In an electricity market environment, energy storage plant owners are remunerated for the provision of services to multiple electricity sectors. Some of these services, however, may accelerate battery aging and degradation and hence this needs to be properly balanced against associated services remunerations. In this framework, we propose a combined economic-degradation model to quantify effects of operational policies (mainly focused on constraining State of Charge-SOC-to prescribed levels in order to reduce effects of aging) on gross revenue, multi-service portfolios, degradation and lifespan of distributed energy storage plants that can provide multiple services to energy and balancing market participants and Distribution Network Operators. Through various case studies based on the Great Britain system, we demonstrate that although operational policies focused on battery damage reduction will lead to a revenue loss in the short-term, such loss can be more than compensated by long-term revenues due to a lengthier battery lifespan. We also demonstrate that operational policies to reduce battery degradation mainly affect services related to the energy (rather than balancing) market, which represents a smaller proportion of the overall revenue streams of a distributed storage plant. The model is also used to study effects of ambient temperature fluctuations.