Financial assessment of battery energy storage systems for frequency regulation service

This paper presents a summary of the expected financial performance of battery storage systems providing market-based frequency regulation service for a regional transmission organization. The potential impact of system characteristics and market structure on the profitability of the project is also evaluated. The Discounted Cash Flow analysis was used to determine the benefit-cost ratio, net present value, internal rate of return, and payback period of energy storage projects. The results of this study indicate that larger systems (greater than 5 MW) with fewer battery replacements (up to 2) are expected to have the best financial performance. The findings of this paper add to a growing body of literature on financial analysis of utility-scale energy storage projects.