Battery storage systems for peak load shaving applications: Part 2: Economic feasibility and sensitivity analysis

This paper is the second of a two-part series, aiming to evaluate the economic feasibility of electrochemical storage systems in peak load shaving applications. The battery energy storage system (BESS) is considered to be added to a private facility, with the aim of reducing the customer electricity bill. The BESS is charged during the night, when the electricity prices are the lowest and discharged during the daily hours, when the prices are the highest, contemporary achieving a leveling of the daily usage pattern. The economical evaluations are carried out considering four different electrochemical technologies: lithium-ion (li-ion), advanced lead-acid, sodium-sulphur (NaS) and flow batteries. First, the total costs and savings are estimated, calculating the net present value (NPV) and the internal rate of return (IRR) for each BESS technology. The economic indexes are calculated referring both to 2015 and to the estimated 2020 BESS prices. Second, a parametric analysis is carried out to investigate the effect of several parameters on the economic feasibility of installing a BESS. The considered parameters are: i) the gap between high and low electricity prices; ii) the peak demand charges; iii) the BESS investment costs. The economic analysis reveals that none of the BESS technologies are cost effective at the current BESS prices, without incentives, but the situation could already change in 2020 thanks to the sharp cost decline expected in the coming years.