Return on Investment Evaluation and Optimal Sizing of Behind-the-Meter Battery Energy Storage Systems in Large Commercial Buildings in Ontario

In Ontario, Canada, electricity in large commercial buildings is charged depending on energy consumption, peak demand, and global adjustment (GA). Installing a behind-the-meter battery energy storage system (BESS) can reduce energy bills for these consumers by: 1) shifting consumption from the high to the low energy price; 2) reducing the peak demand; and 3) mitigating or eliminating the GA charge. In this context, this paper presents a method to estimate the return on investment (ROI) and determine the optimal size of BESS in large commercial buildings in Ontario. The paper’s main contribution is a solid linear model that simulates the BESS optimal operation, complying with the technical characteristics of the BESS, considering Ontario electricity rates and pricing to maximize the ROI from energy arbitrage, peak shaving, and GA busting. Precise formulations for computing the energy bills of large consumers are developed, allowing realistic estimates for the ROI and sizes of BESS. Tests considering two customer classes demonstrate the differences between these classes and the factors that influence the economic returns of BESS for each.