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Publications - Paper

BESS Participation in the Italian Balancing Service: Profitability Evaluation via an Optimal Bidding Approach

Publications - Paper

BESS Participation in the Italian Balancing Service: Profitability Evaluation via an Optimal Bidding Approach

The paper analyzes the participation of a stand-alone Electrochemical Storage System (SdA or BESS) in the Balancing Market, for the provision of balancing service. Using a global optimization procedure, energy exchanges are calculated, at fixed bid prices, to obtain the maximum annual profit from the service. The relative payback period is then compared with the useful life of the BESS estimated from the equivalent cycles performed.

Battery electrochemical Storage Systems (SdAs or BESSs), for stand-alone applications or in support of conventional or renewable plants, represent possible new ancillary service providers offered in the Dispatching Service Market (MSD). The participation of BESSs in the MSD in the real-time phase, i.e., the Balancing Market (MB), is simulated in this study with reference to the provision of the balancing service. From pre-determined offer prices based on accepted historical price levels on MB (in the North market area), a global optimization procedure is used to determine the amounts of energy that a stand-alone BESS should offer on the MB, over the course of a year, to maximize the annual service profit. The cost function can also include a penalty coefficient to account for battery aging. The bids are simulated either on an hourly basis, as required by the current MSD rules, or on a quarter-hourly basis, according to the expected evolution toward real time of market-based service contracting rules at the European level. The acceptance or non-acceptance status of bids, on a quarter-hourly basis, is pre-determined by comparing their price with a reference price (for an up/down bid respectively, the historical maximum/minimum price accepted in each ¼ h). Finally, the profitability of the service offered by the BESS is evaluated in terms of the relative simplified PayBack Period(PBP), defined as the ratio of the BESS investment cost to the calculated maximum annual profit. The PBP is also compared with the useful life of the battery; the latter is estimated from the state-of-charge profile derived from the optimal energy exchanges.

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