Abstract: Battery energy storage is among the building blocks of the Energy Internet. To improve the economy and battery life of the demand-side battery energy storage system (BESS), an optimal sizing and control method for the BESS is proposed based on an optimal scheduling approach. First, a cost-benefit analysis model is developed for evaluating the economy of demand-side energy storage. Accounting for the characteristics of battery capacity degradation under different depth of discharge (DOD) as well as the uncertainties of load and renewable generation, the optimal power and energy capacities of the BESS are determined by a stochastic scheduling method. For energy management, model predictive control is applied to adapt to the changes of the system conditions, and the profit generated by the BESS as well as the battery cycle life are optimized jointly. The proposed method considers the system operations in the planning model in order to give a more accurate evaluation of the revenues generated by the BESS. Case studies compare the economy of several types of battery energy storage including second-use batteries, and demonstrate the effectiveness of the proposed joint planning and operating method in optimizing the economic benefits of demand-side energy storage. Numerical results indicate that the economic benefits of new lead carbon batteries and second-use LiFePO4 batteries outperform new LiFePO4 batteries in terms of payback periods and annual profits.

Key words: demand-side energy storage, battery energy storage system, optimal scheduling, capacity sizing, economic analysis