Optimizing the Energy Scheduling and Assessing Profitability of BESSs in Buildings Considering Battery Degradation

Battery energy storage systems (BESSs) are an emerging technology that can be integrated into buildings equipped with photovoltaic systems to reduce the electricity cost for prosumers in the face of volatile electricity prices. This work develops an optimization scheme for the energy scheduling of a BESS integrated in a residential building with photovoltaic systems considering a variable electricity pricing scheme and battery degradation. The proposed scheme is formulated as a linear program that can be solved fast and reliably over long-term time horizons, enabling its usage for both planning and operating strategies. Utilizing the developed optimization model, a financial analysis is performed to assess the long-term BESS profitability by calculating the net present value (NPV) and internal rate of return (IRR) using real data from a residential building. Simulation results demonstrate the increment of the NPV and IRR using the proposed optimization scheme compared to the corresponding scheme that ignores BESS degradation. The results also highlight that the proper selection of the penalty cost in cycle-based battery degradation cost models is critical for the enhancement of the battery profitability.