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An economical study on the application of battery energy storage systems for peak load shaving
Peak loads are very expensive to manage because of the cost of energy at peak. At peak, utilities are in desperate need of electric power and can buy the energy at any cost to serve the loads. Load valleys are equally expensive to manage because most base load units which are generally large i.e. coal or nuclear units, cannot be turned off in the middle of the night when loads are very low. To address this problem, utilities are always looking for ways to achieve more economical operation of the electric grid while striving for greater reliability. To reduce costs during peak demand periods, utility distribution companies (UDC) employ Demand Side Management strategies . Direct Load Control is one common program, which enables the UDC to offer customers a lower rate in exchange for UDC’s control of certain loads such as air freezers, heavy equipment’s, dryers, water heaters and air conditioners in order to control power demand during peak periods when electricity is very expensive . The use of energy storage device is another attractive way to shave the peak demand or level the load valleys reliably. By utilizing Battery Energy Storage Systems (BESS), a cheaper source of electricity power can be secured to meet the peak demand . An adequate energy storage device can be charged during the very low consumption periods of the day with lower cost sources of energy production such as nuclear power or coal fired units. The stored electrical power is in effect used during high demand periods so that expensive units such as gas fired units, and expensive fuel cost units, such as combustion turbines, can be preserved for future or emergency needs. From the utility perspective, since more electrical energy can be purchased during Off Peak periods when prices are very low and released during the On Peak periods when prices are high, BESS can potentially be profitable . But, how profitable can the use of these devices be for electrical utility distribution companies? The goal of this project is not only to show that battery storage device can shave the peaks or level the valleys but also what difference can these devices make in the bottom line of the utility distribution companies. The analysis is performed from the California ISO (CAISO) power grid perspective using GE PSLF and a simulated power flow. The load flow is run on a load pocket and then extended to the entire CAISO network. In addition, the project compares the BESS fixed cost and the BESS discharged revenue using Off Peak and On Peak Locational Marginal Prices (LMP) to determine an estimated profit for utility distribution companies that choose to utilize the BESS technology to serve load. From the proxy cost benefit analysis standpoint, it is shown that the BESS devices can be profitable for utilities even though the breakeven MWh is very high when the LMP is very low and the fixed storage cost very high. The breakeven MWh is 5000 MWh when the LMP is $40.00 per MWh and the fixed cost for storage is about $200,000.00 a year. On the other hand, the breakeven is as high as 45,000 MWh when the fixed cost of the BESS device is $1,800,000.00 .