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journal homepage: www.elsevier.com/locate/est

Di Wua,* , Michael Kintner-Meyera , Tao Yangb , Patrick Balduccia

a

Paciﬁc Northwest National Laboratory, Richland, WA 99354, USA

b

University of North Texas, Denton, TX 76203, USA

A R T I C L E I N F O A B S T R A C T

Article history:

Received 12 January 2017 In behind-the-meter application, battery storage system (BSS) is used to reduce a commercial or

Received in revised form 21 April 2017 industrial customer's payment for electricity use, including energy and demand charges. The potential

Accepted 22 April 2017 value of BSS in payment reduction and the optimal size can be determined by formulating and solving

Available online 4 June 2017 standard mathematical programming problems. In such mathematical programming methods, users

input system information such as load proﬁles, energy/demand charge rates, and battery characteristics

Keywords: to construct a standard programming problem, which typically involves a large number of constraints

Battery sizing and decision variables. The problems are then solved by optimization solvers to obtain numerical

Behind-the-meter

solutions. Such kind of methods cannot directly link the obtained optimal battery sizes to input

Energy storage system

parameters and requires case-by-case analysis. In this paper, we present an objective quantitative

Optimization

analysis of costs and beneﬁts for customer-side BSS, and thereby identify key factors that affect optimal

sizing. We then develop simple but effective guidelines for determining the most cost-effective battery

size. The proposed analytical sizing methods are innovative, and provide engineering insights on how the

optimal battery size varies with system characteristics. We illustrate the proposed methods using

practical building load proﬁle and utility rate. The obtained results are compared with the ones using

mathematical programming based methods for validation.

© 2017 Published by Elsevier Ltd.

ﬂexibility and reducing energy cost.

The operation of electric power sector requires ﬂexibility to Many studies have been devoted to various ESS technologies for

realize instantaneous balance between generation and constantly grid applications. The technical and economic characteristics of an

changing demand. Wind and solar power have been developed array of ESS technologies are reviewed and compared in [1–3],

rapidly in recent years world-wide. With their natural variability including pumped hydro, battery storage, ﬂywheel, compressed

and uncertainty, these renewable energy resources introduce air, superconducting magnetic energy storage, and advanced

additional variation to power systems and present difﬁculties and capacitors. Studies [4,5] are dedicated to various battery technolo-

challenges to system operators. Energy storage system (ESS) has gies and methods of assessing their economic viability and impacts

been a candidate for meeting ﬂexibility and reserve requirement on power systems. The identiﬁed grid applications include energy

from power grid for years. Recent developments and advances in arbitrage/load leveling, frequency regulation, load following,

energy storage and power electronics technologies are making the spinning and non-spinning reserves, T&D deferral etc. A review

application of energy storage a viable solution for increasing of several ESS technologies for wind power applications is provided

ﬂexibility and improving reliability of power systems. When in [6]. There are also many studies focusing on the optimal

delivered via behind-the-meter application, energy storage can operation and sizing for BSS, and can be categorized into

transmission, distribution and customer-side applications.

$

This material is based upon work supported by the U.S. Department of Energy performance of NaS batteries for energy arbitrage and ﬂywheels

(DOE), Ofﬁce of Electricity Delivery and Energy Reliability through its Energy for regulation services based on ﬁxed utilization factors for

Storage program, and Washington State Department of Commerce Clean Energy

NYISO and PJM systems. Ref. [8] incorporates realistic CAISO

Fund. Paciﬁc Northwest National Laboratory is operated for the DOE by Battelle

Memorial Institute under Contract DE-AC05-76RL01830. regulation signals and battery responses to yield more granular

* Corresponding author. results. In [9], the authors investigate the application of battery

E-mail address: di.wu@pnnl.gov (D. Wu).

http://dx.doi.org/10.1016/j.est.2017.04.009

2352-152X/© 2017 Published by Elsevier Ltd.

298 D. Wu et al. / Journal of Energy Storage 12 (2017) 297–304

Nomenclature

in the control scheme, the optimal battery sizing procedure is

proposed. In [19], the authors develop a frequency-based

a battery equivalent capital cost with respect to energy approach to size a battery-supercapacitor energy storage system

size ($/kWh) for maintaining power balance of an isolated system with high

b battery equivalent capital cost with respect to power penetration of wind generation, thus to maintain the grid

size ($/kW) frequency stability with the stochastic wind power ﬂuctuations.

Ecycle the maximum amount of load that can be shifted Customer-side: Customer-side BSS is gaining popularity among

from peak hours to off-peak hours considering commercial and industrial businesses as a cost-effective solution

battery storage power capacity to reduce energy and demand charges. In such an application, the

Eoffpeak the amount of energy charged during off-peak hours battery is utilized by customers for saving energy cost, rather

Emax battery storage energy capacity than by system operators for improving distribution system

Epeak the amount of energy discharged during peak hours operation. This is also referred to as behind-the-meter BSS

ND number of days in a year because the battery is literally “behind-the-meter”, on the

NM number of months in a year owner's property, not on the side of the electric utility. This

pmax battery storage power capacity market is predicted to grow rapidly. In California Public Utilities

roffpeak off-peak rate ($/kWh) Commission's mandatory energy storage procurement targets,

rpeak peak rate ($/kWh) its IOUs are required to collectively procure 200 MW energy

Toffpeak duration (in h) of off-peak period storage in the customer-side domain by 2020 [20]. According to

Tpeak duration (in h) of peak period GTM Research, over 700 MW of distributed energy storage will

a capital recovery factor (levelized annual ﬁxed- be deployed in the U.S. between 2014 and 2020 [21]. However,

charge rate) only few studies have been carried out for economic analysis and

b monthly demand charge rate ($/kW/month) optimal sizing of battery storage in behind-the-meter applica-

Dr saving in energy charge by cycling per unit energy tion. In [22], the authors develop a peak-shaving control

from off-peak to peak time period algorithm to determine battery charging and discharging

hround battery round-trip efﬁciency operation, and then calculate the economic beneﬁts in demand

ropt optimal ratio of energy size to power size for a charge reduction for a few given battery sizes. Ref. [23] considers

battery storage system an application bundle including both energy and demand charge

reduction. One application is treated as primary and determined

ﬁrst, and then the other application is evaluated. Ref. [24]

explicitly formulates a co-optimization problem considering

storage system (BSS) for relief of transmission line thermal both the energy and demand charges. Dynamic programming

constraints, and therefore increase the transfer capability. Based technique is used to solve the problem to obtain the optimal

on a case study, an economic analysis of beneﬁts and costs is charging schedule. The charging and discharging efﬁciencies

provided. Ref. [10] presents control algorithms and sizing have not been modeled. These papers provide different methods

strategies for using BSS to manage energy imbalance for variable in evaluating economic beneﬁts for a given size of battery

generation resources. The authors in [11] develop an optimal storage, but have not addressed the optimal sizing problem

control strategy of BSS for smoothing out the intermittent power considering the trade-off between economic beneﬁt and cost.

from the wind farm. In [12], an evaluation framework and co- Therefore, the authors [25] study optimal sizing of a solar-plus-

optimization are proposed to assess BSS economic performance storage system for utility bill savings and resiliency beneﬁts.

considering multiple grid applications simultaneously, including Rather than formulating explicit optimal sizing problem, a

energy arbitrage, balancing services, capacity value, distribution number of simulations are carried out to obtain the economic

upgrade deferral, and outage mitigation. In [13], a method is and resiliency beneﬁts for different solar-plus-storage sizes, and

proposed for identifying the sites where BSS should be located to then select the optimal one. In [26], the authors formulate linear

perform spatial-temporal energy arbitrage most effectively and optimization problems for economic analysis and optimal sizing

the optimal size of these systems. of behind-the-meter BSS. This method explicitly models the

Distribution and microgrid: The authors of [14] present an charging and discharging efﬁciencies and co-optimizes the

optimal sizing method for BSS in a microgrid, where the unit battery operation for both energy and demand charge reduction.

commitment problem with spinning reserve for microgrid is No analytical expression is given for optimal battery sizes as

formulated as a mixed linear integer problem. Ref. [15] functions of key factors such as load magnitude, energy/demand

investigates the potential of using BSS in the public low-voltage charge rate, peak/off-peak time periods, and therefore cannot

distribution grid, to defer upgrades needed to increase the provide much engineering insights on how the optimal battery

penetration of photovoltaics, where a multi-objective optimiza- size varies with those factors. This motivates the work presented

tion method is proposed to visualize the trade-offs between in this paper.

three objective functions: voltage regulation, peak power

reduction, and annual cost. An optimal scheduling and cost- This paper presents analytical sizing methods for behind-the-

beneﬁt analysis for microgrid applications is developed in [16]. meter battery storage. The main contributions of this paper are

Dynamic programming is used to solve the optimal scheduling summarized as follows.

problem and determine the optimal BSS power and energy

ratings for both isolated and grid-connected microgrids. The Developing analytical sizing method for battery storage is a

authors in [17] formulate an optimization problem to minimize challenging problem. Existing methods rely on standard

microgrid energy cost using BSS subject to operational con- mathematical programming for battery operation and sizing

straints. A recent optimization technique called grey wolf analysis, which cannot explicitly directly link the output to input

optimization is then applied to solve the problem and determine parameters and requires case-by-case analysis. This paper

the optimal BSS size. In [18], the authors develop a primary proposes an innovative objective quantitative analysis of costs

frequency control scheme for islanded microgrid using BSS. Then

D. Wu et al. / Journal of Energy Storage 12 (2017) 297–304 299

and beneﬁts for customer-side BSS with respect a few key charged during off-peak hours should be

factors.

Epeak

Practitioners need effective rule and guidelines for investment Eoffpeak ¼ ; ð2Þ

decision making on battery storage or utility rates design to

hround

stimulate the development of battery storage. This paper where hround is the BSS round-trip efﬁciency. Based on (1) and (2),

provides analytical expression of optimal battery sizes and the energy arbitrage is only proﬁtable when the rate difference

corresponding beneﬁts, and/or develop simple but effective between peak and off-peak hours is signiﬁcant enough compared

guidelines and algorithms to meet such a need. with round-trip efﬁciency, i.e.,

roffpeak

The rest of this paper is organized as follows: Section 2 presents < hround : ð3Þ

rpeak

the beneﬁt and cost analysis and develops rules and guidelines for

optimal sizing. In Section 3, practical utility rate and commercial Given (3) is satisﬁed, according to the daily saving expressed

building load proﬁle are used to illustrate the proposed analytical in (1), annual beneﬁt in energy charge reduction can be expressed

sizing methods. The optimal battery storage sizes are ﬁrst as

determined using the proposed analytical methods, and then

roffpeak

compared with the results obtained using linear programming S ¼ ND Epeak rpeak ; ð4Þ

methods for validation. Finally, Section 4 concludes the paper. hround

where ND is number of days in a year. On the other hand, the

2. Beneﬁt-cost analysis and sizing guideline development levelized annual battery cost can be expressed as

In customer-side domain, the two main applications of BSS are C ¼ aðaEmax þ bpmax Þ; ð5Þ

energy charge and demand charge reduction. Energy charge is where a is the capital recovery factor (levelized annual ﬁxed-

based only on the amount and time when energy is consumed. It charge rate), a is BSS capital cost with respective to energy size

reﬂects the operational cost in electricity generation and delivery. ($/kWh), Emax is BSS energy capacity, b is BSS capital cost with

Demand charge is based on the highest power consumption during respective to power size ($/kW), and pmax is BSS power capacity.

a billing period (typically a month). It is mainly designed to recover Therefore, levelized annual beneﬁt can be calculated as

the investment in electricity generation and transportation

infrastructure. Separate charges for energy consumption and B ¼SC

roffpeak ð6Þ

demand more fairly distribute power system's operational and ¼ ND Epeak rpeak aðaEmax þ bpmax Þ:

hround

investment cost to customers. This section presents beneﬁt and

cost analysis for both energy and demand charge and derives rules Given that there exist some Emax and pmax such that B > 0, what

and guidelines for optimal sizing. In particular, Section 2.1 analyzes is the optimal ratio between battery energy size and power size so

energy charge reduction, while Section 2.2 analyzes demand that B is maximized? In order to maximize the annual beneﬁt B, we

charge reduction. The two applications are studied jointly in need to maximize the daily energy discharged during peak hours

Section 2.3. Epeak, which is limited by BSS energy and power capacity, as

expressed in (7).

2.1. Energy charge reduction

Epeak min fT peak pmax ; hround T offpeak pmax ; Emax g ð7Þ

In time-of-use (TOU) pricing program, instead of a single ﬂat where Tpeak and Toffpeak are duration of peak and off-peak period,

rate for energy use, different rates are set for speciﬁed time periods respectively. Let us ﬁrst ﬁx pmax, and let Ecycle = min{Tpeakpmax,

on an advance or forward basis. TOU programs allow consumers to hroundToffpeakpmax}. It can be shown that

respond to the rates and manage their energy cost by shifting usage

roffpeak

to a lower cost period, which can not only help consumers save ND rpeak aa > 0 ð8Þ

money but also reduce strain on the electric grid. Most of utilities hround

in the U.S. have launched TOU rate programs especially for is a necessary condition such that (6) is positive. Given (8) is

commercial customers. In California, a plan has been set forth to satisﬁed, the annual beneﬁt B in (6) monotonically increases as

make TOU rate programs the commercial standard for all of the Epeak increases from 0 to Ecycle. Because of (7), increasing energy

state's major electric utilities. This paper considers TOU plans for size Emax beyond Ecycle only increases battery cost but cannot

energy charge. increase Epeak and therefore cannot increase saving in energy

The customer can charge the battery with cheap energy during arbitrage. Hence, the optimal energy size is

off-peak hours, and discharge the battery during peak hours when

energy price is high. This is referred to as energy arbitrage or peak Emax ¼ Ecycle ; ð9Þ

shaving. It should be noted that in energy charge reduction

application, the optimal battery operation and corresponding and optimal energy to power ratio is

beneﬁts do not vary with load proﬁle. In order to obtain positive ropt ¼ min fT peak ; hround T offpeak g: ð10Þ

beneﬁts from energy arbitrage, the saving in electricity usage

during peak hours should be more than the cost of additional Replacing Epeak and Emax in (6) by roptpmax, after manipulation,

electricity consumption used to charge the battery during off-peak yields

hours, i.e., " !#

roffpeak aa ab

rpeak Epeak roffpeak Eoffpeak > 0; ð1Þ B ¼ ND ropt pmax rpeak þ : ð11Þ

hround ND ND ropt

where rpeak and roffpeak are the peak and off-peak rate, respectively, The physical meaning of important terms in (11) are explained as

Epeak and Eoffpeak is the amount of energy discharged during peak follows:

hours and charged during off-peak hours, respectively. In order to

maintain energy-neutral status of battery, amount of energy roptpmax : Optimal energy size.

300 D. Wu et al. / Journal of Energy Storage 12 (2017) 297–304

rpeak roffpeak : Daily energy charge savings per unit battery energy

h round

size.

NaDa : Levelized daily battery energy investment cost per

unit energy size.

ab : Levelized daily battery power investment cost per

ND ropt

unit energy size under optimal energy to power

ratio.

analysis and investment guidance, as illustrated with the following

example systems, whose parameters are listed in Table 1. These

parameters are developed based on the data in Refs. [22,26].

According to (4) and (11), beneﬁt analysis and investment

guideline are explored in energy rate space and battery cost space

in Fig. 1(a) and (b), respectively, where the optimal energy to

power ratio is determined using (10).

The rate space in Fig. 1(a) is divided into three regions.

resulting in negative saving from energy arbitrage.

In the green region, condition (3) is satisﬁed, but the daily energy

charge saving per unit battery energy size is not big enough to

cover the levelized daily battery energy investment cost per unit

energy size (under optimal energy to power ratio). Therefore,

investment in battery for energy cost saving is not cost-effective

either. The slope of the edge between yellow and green regions is

1/hround.

In the white region, (11) is positive. The expected saving in

energy charge is bigger than battery cost. It is interesting to note

that the edge between intersection white and green regions has

an intersection point with y-axis. Its value (about $0.16/kWh this

case) is the levelized daily battery energy investment cost per

unit energy size (under optimal energy to power ratio).

Therefore, in order to motivate a battery storage to participate Fig. 1. Operational and sizing guideline example. (For interpretation of the

energy shifting services, the energy charging rates offered by references to color in text near the ﬁgure citation, the reader is referred to the web

version of this article.)

utilities need to at least stay in the green region. Utility rates in the

white region provide even bigger difference between peak and off-

peak prices and therefore can help customers to ﬁnancially justify load monotonically increases from minimum to maximum and

their investment in battery storage. It should be noted that in white monotonically decreases from maximum to minimum. Fig. 2

region, if the battery's power size is limited, its optimal energy size illustrates the idea of demand charge reduction. Without

can be determined using the optimal ratio given in (10), and vice discharging BSS during peak hours, the demand at the meter is

versa. On the other hand, without limiting power or energy size, D0. By discharging BSS during peak hours, the net demand at the

the proﬁt optimization problem is unbounded. meter is reduced to DT, where T denotes the time duration of

The battery cost space in Fig. 1(b) is divided into two regions. original load that is higher than or equal to DT. The height of yellow

Per unit battery investment cost becomes more expensive as it region indicates the demand reduced at the meter, which is the

goes to upper and right, and therefore resulting in more same for all months in this case. As we continue lowering demand

investment cost than savings at some point. The boundary level, the annual incremental saving in demand charge can be

between “Investment” and “No investment” regions is quite expressed as:

vertical, which means the investment decision is more sensitive DS ¼ NM bDd; ð12Þ

to energy capacity cost than power capacity cost. This property can

be expected in general for practical Tpeak and Toffpeak. where NM is the number of months in a year, b is the demand

charge rate ($/kW/month), and Dd is the incremental change in

2.2. Demand charge reduction demand reduction. The effectively reduced demand by Dd, the

minimum of required increment in energy capacity is TDd.

Demand charge is a billing mechanism used to recover the cost

of providing transmission and distribution service to customers. It

is calculated based on the highest load during a billing period Table 1

Parameters of example system.

(typically a month). The monthly peak demand can be reduced by

discharging the battery during peak hours, and therefore reducing Param. Value Param. Value

demand charge. Both case (a) & (b) a 0.1168a hround 0.77

ropt 9h ND 365

2.2.1. Similar monthly peak load shape Case (a) a 500$/kWh b 125$/kWh

Case (b) rpeak 0.145$/kWh roffpeak 0.086$/kWh

For simplicity, let us ﬁrst assume peak day load shape in each

month are approximately the same. In addition, it is assumed that a

15 years lifetime with 8% discount rate.

D. Wu et al. / Journal of Energy Storage 12 (2017) 297–304 301

Fig. 3. Optimal load duration at new demand level (Topt) as a function of battery

cost, where demand charge rate (b in $/kW/month) is a parameter. The horizontal

plane is the maximal Topt limited by energy-neutral constraint.

the peak is cut perfectly to ﬁll the valley. The minimum demand is

references to color in text near the ﬁgure citation, the reader is referred to the achieved and Topt depends on load shape.

web version of this article.) Once Topt is determined, one can immediately ﬁnd DT opt . The

corresponding optimal battery power size can be calculated as

According to (5), the corresponding minimum increment in

pmax ¼ D0 DT opt : ð18Þ

battery cost is

Z t0 þT opt

The incremental levelized net beneﬁt can be calculated as Emax ¼ ½DðtÞ DT opt dt; ð19Þ

t0

DB ¼ DS DC ð14Þ

¼ DdðNM b ab aaTÞ: where D(t) is the load as a function of time, and t0 is the starting

time when load level reaches DT opt (please refer to Fig. 2).

It can be shown that

In practice, the peak day load shape in each month could be

is a necessary and sufﬁcient condition to receive positive net quite different. In this case, an incremental reduction in demand

beneﬁt in demand charge reduction. Given (15) is satisﬁed, the Dd in each month could be associated with different T and

incremental beneﬁt decreases as T increases, but the total beneﬁt therefore requires different amount of increment in BSS energy

increases with T as long as DB 0. The maximum beneﬁt is capacity. Hence, the proposed method in Section 2.2.1 cannot be

obtained when DB = 0, i.e., used to determine the optimal sizes of BSS in this case.

Given (15) is satisﬁed, there always exist BSS energy and power

NM b b

T opt ¼ ; ð16Þ sizes such the net-beneﬁt is positive. For month i, let Di0 denote the

aa a

original monthly load level, DiT i denote the corresponding reduced

which is independent of load shape. The demand charge rate

offered by utility need to satisfy (17) for battery storage to monthly load level, and Ti denote the time duration of original load

participate peak demand reduction. that is higher than or equal to DiT i . It is not difﬁcult to see that the

BSS power capacity only needs to be

b > ab=NM : ð17Þ

Fig. 3 plots Topt as a function of a and b (BSS investment cost per pmax ¼ max ðDi0 DiT i Þ; ð20Þ

i

kWh and per kW), for a set of b (demand charge rate). As can be

seen, larger demand charge rate generates more incentives for because bigger power capacity increases BSS cost and smaller

demand reduction, and therefore increment in Topt. In addition, power capacity cannot achieve the reduced load level DiT i for all the

higher battery cost for per unit energy and power (a and b) reduced months. Let imax denote the month index when the maximum is

the cost-effectiveness of demand charge reduction, and therefore achieved for (20).

reducing Topt. Moreover, Topt is not sensitive to b, because the Now, assuming the BSS energy size is increased by DE, the

second term on RHS of (16) is typically small compared with the monthly demand reduction is DT Ei and the annual saving in demand

ﬁrst term. As T and the energy discharged during peak hours

charge is

increase, at some point, there is not enough time to recharge the

battery during off-peak hours to maintain BSS energy-neutral X

NM

DE

status over long term. This creates another constraint that limits T. DS ¼ b :

i¼1

Ti

Given practical demand charge rate and battery cost, energy-

neutral constraint is inactive, and Topt is directly determined by It should be noted that effective demand reduction requires

(16). However, in extreme cases where battery is very cheap additional power capacity, which is set by month imax, and the

compared with demand charge rate, energy-neutral constraint required increment in power capacity is TD

i

E

. Therefore, the annual

determines Topt. In that case, the net-load at the meter is ﬂat, i.e.,

max

302 D. Wu et al. / Journal of Energy Storage 12 (2017) 297–304

levelized incremental BSS cost becomes difference between (23) and (14) is NDDr T, which is the

incremental saving from energy charge reduction. In practice,

DE

D C ¼ a aD E þ b NMb ab is always positive, and NDDr aa is typically negative.

T imax

Therefore, the incremental beneﬁt decreases as T increases, but the

The incremental levelized annual beneﬁt can be calculated as cumulative beneﬁt increases with T as long as DB 0. The

maximum beneﬁt is obtained when DB = 0, i.e.,

DB ¼ DS DC !

XNM

1 b NM b ab

¼ DE b aða þ Þ T opt ¼ : ð24Þ

T T imax ð21Þ aa ND Dr

i¼1 i

|ﬄﬄﬄﬄﬄﬄﬄﬄﬄﬄﬄﬄﬄﬄﬄﬄﬄﬄﬄﬄﬄﬄ{zﬄﬄﬄﬄﬄﬄﬄﬄﬄﬄﬄﬄﬄﬄﬄﬄﬄﬄﬄﬄﬄﬄ}

L

Compared with demand charge only case, saving from energy

charge helps to increase Topt and therefore the battery size. Once

The beneﬁt increases as long as DB 0. Based on this analysis, Topt is obtained, one can calculate the battery size using (18) and

Algorithm 1 is developed to ﬁnd the optimal BSS sizes. The sizing (19). In extreme cases when NDDr > aa, (23) is always positive and

analysis is based on the calculation of incremental beneﬁt as a the problem is theoretically unbounded.

function of DE. Therefore, DE should be small. The proposed

algorithm uses binary search method on DE, and therefore ensures 2.3.2. Distinct monthly peak load shape

the accuracy for any initial value. Nevertheless, too small or too When the peak day load shape varies signiﬁcantly from month

large initial value of DE could increase the iteration numbers. In to month, the analysis in Section 2.2.2 can be modiﬁed to include

this study, the initial value of DE is chosen as one percent of the energy charge component. In this case, the calculation in (21) is

peak hour load. In Algorithm 1, the initial Emax should be small modiﬁed to include saving in energy charge, and the increment in

enough to ensure that we start with a positive marginal beneﬁt. We levelized annual beneﬁt becomes

then gradually adjust Emax until it results in a zero marginal beneﬁt. !

X

NM

1 b

The initial value of Emax also needs to be bigger than DE. In this DB ¼ DE N D Dr þ b aða þ Þ ð25Þ

T T imax

study, we set the initial Emax as four times of initial DE. The i¼1 i

corresponding levelized annual beneﬁt can be calculated as |ﬄﬄﬄﬄﬄﬄﬄﬄﬄﬄﬄﬄﬄﬄﬄﬄﬄﬄﬄﬄﬄﬄﬄﬄﬄﬄﬄﬄﬄﬄﬄﬄ{zﬄﬄﬄﬄﬄﬄﬄﬄﬄﬄﬄﬄﬄﬄﬄﬄﬄﬄﬄﬄﬄﬄﬄﬄﬄﬄﬄﬄﬄﬄﬄﬄ}

L0

X

NM

Emax

B¼b aðaEmax þ bpmax Þ: ð22Þ Hence, the optimal BSS scale can be determined using Algorithm 1

i¼1

Ti by replacing L in (21) at line 5 with L0 in (25).

3. Case studies

Algorithm 1. Battery sizing for demand charge reduction with

distinct monthly peak load shape. In this section, practical utility rate and commercial building

load proﬁle are used to illustrate the proposed analytical sizing

1: Initialize Emax that is small enough to ensure positive beneﬁt and DE

methods. Commercial buildings can be categorized based on their

2: repeat

3: principal building activities, including ofﬁce, retail, warehouse,

Based on current Emax, calculate Ti and DiT i for each month i.

4: education, hotel, healthcare, grocery, restaurant, bank, and others.

For obtained DiT i , determine pmax, imax, and T imax using (20).

5:

The potential beneﬁts and optimal sizes of BSS depend on building

Calculate L in (21).

6: if L 0 then electricity use pattern, which varies with building type and

7: Emax Emax + DE geographical location. The study in [27] develops a library of

8: else building load proﬁles, consisting of 68 building load data sets for

9: Emax Emax DE six building types (ofﬁce, retail, school, hotel, hospital and

10: DE DE/2

11: end if

warehouse) and four locations in different climate zones (San

12: until DE is small enough Francisco, Chicago, Houston, and New York City) from three

13: return Emax, pmax research institutes. Ofﬁce buildings represent the most important

building type, accounting for about one ﬁfth of total ﬂoor space and

building in the U.S. [28], and thereby we select ofﬁce building load

proﬁle in Houston to illustrate and validate the proposed analytical

2.3. Energy and demand charge reduction sizing methods in this paper.

The optimal battery storage sizes are ﬁrst determined using the

In the case where both energy and demand charge reduction are proposed analytical methods, and then compared with the results

considered, BSS sizes and charging/discharging operation should obtained using linear programming methods presented in [26] for

be analyzed considering net-beneﬁts from both applications. In validation. In particular, Section 3.1 and Section 3.2 study energy

practice, it is safe to assume that demand reduction occurs during charge reduction and demand charge reduction, respectively. The

peak-hours, and therefore discharging BSS during peak hours can two applications are studied jointly in Section 3.3.

help to reduce both energy and demand charges.

3.1. Energy charge reduction

2.3.1. Similar monthly peak load shape

In this case, calculation in (14) is modiﬁed to include energy In this subsection, optimal sizing and potential beneﬁts of BSS

charge saving, and the increment in levelized beneﬁt becomes are studied considering energy charge reduction only. The

assumed capital recover factor (a), round-trip efﬁciency (hround),

DB ¼ ðND T DdDr þ NM bDdÞ aðaT Dd þ bDdÞ ; ð23Þ and battery capital cost (a and b) are the same as Case (b) listed in

¼ Dd½NM b ab þ ðND Dr aaÞT Table 1. The assumed charging and discharging efﬁciencies

(including both battery and inverter) are 0.887 and 0.868,

where Dr ¼ rpeak hoffpeak , which is the reduced energy cost by

r

round respectively, which are needed in the linear programming

cycling per unit energy from off-peak to peak hours. The only methods. The peak hours are from 7am to 4pm, with a duration

D. Wu et al. / Journal of Energy Storage 12 (2017) 297–304 303

Fig. 6. Annual saving vs. levelized annual cost with optimal BSS sizes.

Fig. 4. Levelized annual net-beneﬁt vs BSS energy capacity.

building load proﬁle in Houston used in this paper, the peak day

of 9 h. The other hours are off-peak hours. Positive net-beneﬁt from load shape in different months are quite different. Therefore,

energy charge reduction requires that off-peak and peak rates fall Algorithm 1 is used to ﬁnd the optimal energy and power size,

in the write region in Fig. 1(a), Herein, it is assumed off-peak and which are 43.6 kWh and 18.2 kW, respectively. The corresponding

peak energy charge rates (roffpeak and rpeak) are 0.07$/kWh and 0.26 levelized annual net-beneﬁt can be calculated by (22), which is

$/kWh, respectively. $2003. This optimal size and the corresponding beneﬁt are the

With these parameters, one can verify that the necessary same as those obtained using the linear programming methods

condition of positive beneﬁt in (8) is satisﬁed. The optimal energy presented in [26].

to power ratio can be determined by (10), which is 9 h. As analyzed The annual beneﬁts are explored in the energy and power

in Section 2.1, in white region, without limiting power or energy capacity space, as plotted in Fig. 5. It can be observed that beneﬁts

size, the proﬁt optimization problem is unbounded. Therefore, the do not vary signiﬁcantly with energy or power size around the

BSS maximum power is assumed to be 50 kW in this case, and the optimum. In other words, a few different sizes of BSS generate

corresponding optimal energy size is 450 kWh. The levelized approximately the same performance on economic beneﬁts. In

annual net-beneﬁt can be calculated using (11), which is $754.7. such a case, rather than simply taking the optimum, other factors

Next, optimal sizing is studied using the linear programming such as available models from BSS manufactures, budget and space

methods presented in [26]. The beneﬁts for different BSS energy constraints should be considered to select the most appropriate

capacity are explored, as plotted in Fig. 4. The result is consistent BSS size among a few good candidates.

with the analysis in Section 2.1. Because the necessary condition in

(8) is satisﬁed in this example, the net-beneﬁt monotonically 3.3. Energy and demand charge reduction

increases as Emax increases from 0 to Ecycle = min{Tpeakpmax,

hroundToffpeakpmax}, which is 450 kWh in this example. The net- In this subsection, optimal sizing is studied considering both

beneﬁt reaches the maximum when BSS energy capacity equal energy and demand charge reduction. All the parameters are the

450 kWh, i.e., the optimal energy to power ratio is 9 h, and then same as Section 3.2, and the off-peak and peak energy charge rates

decreases as Emax increases. The corresponding maximum annual are assumed to be 0.86$/kWh and 0.145$/kWh, respectively. Using

beneﬁt is the same as calculated using the proposed analytical the method proposed in Section 2.3.2, the optimal energy and

method. power sizes are found to be 76.4 kWh and 23.7 kW, respectively.

The corresponding levelized annual net-beneﬁt is $2715.1.

3.2. Demand charge reduction Compared with the demand charge only case, additional saving

from energy charge helps increase BSS sizes and the corresponding

In this subsection, optimal sizing and potential beneﬁts are net-beneﬁt. Fig. 6 plots the annual saving from energy and demand

studied considering demand charge reduction only. The same charge reduction, as well as levelized annual cost for the optimal

parameters in previous subsection are used here. In addition, the BSS sizes. As can be seen, the demand charge reduction dominates

demand charge rate is assumed to be $30/kW/month. For the ofﬁce the total saving and contributes much more to net-beneﬁt. This

result is quite typical for practical utility rates and existing BSS

technologies.

4. Conclusions

behind-the-meter BSS to reduce the electricity bill in energy and

demand charges, considering the trade-off between beneﬁts and

costs. The proposed methods are based on objective quantitative

analysis and result in simple but effective rules and guidelines that

can be used to determine the most cost-effective battery size or

guide utility rate design for stimulating energy storage develop-

ment. With the proposed methods, optimal sizing and analysis

have been performed using typical commercial building load

proﬁle and utility rates in a few cases. It is found that with much

simpliﬁed procedures, the proposed analytical sizing methods can

Fig. 5. Net-beneﬁt with different battery sizes. not only effectively identify the most cost-effective BSS sizes as

304 D. Wu et al. / Journal of Energy Storage 12 (2017) 297–304

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