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A Simple Operating Strategy of Small-Scale Battery Energy Storages for Energy Arbitrage under Dynamic Pricing Tariffs

Author

Listed:
  • Enrico Telaretti

    (Department of Energy, Information Engineering and Mathematical Models, University of Palermo, Viale delle Scienze, 90128, Palermo, Italy)

  • Mariano Ippolito

    (Department of Energy, Information Engineering and Mathematical Models, University of Palermo, Viale delle Scienze, 90128, Palermo, Italy)

  • Luigi Dusonchet

    (Department of Energy, Information Engineering and Mathematical Models, University of Palermo, Viale delle Scienze, 90128, Palermo, Italy)

Abstract

Price arbitrage involves taking advantage of an electricity price difference, storing electricity during low-prices times, and selling it back to the grid during high-prices periods. This strategy can be exploited by customers in presence of dynamic pricing schemes, such as hourly electricity prices, where the customer electricity cost may vary at any hour of day, and power consumption can be managed in a more flexible and economical manner, taking advantage of the price differential. Instead of modifying their energy consumption, customers can install storage systems to reduce their electricity bill, shifting the energy consumption from on-peak to off-peak hours. This paper develops a detailed storage model linking together technical, economic and electricity market parameters. The proposed operating strategy aims to maximize the profit of the storage owner (electricity customer) under simplifying assumptions, by determining the optimal charge/discharge schedule. The model can be applied to several kinds of storages, although the simulations refer to three kinds of batteries: lead-acid, lithium-ion (Li-ion) and sodium-sulfur (NaS) batteries. Unlike literature reviews, often requiring an estimate of the end-user load profile, the proposed operation strategy is able to properly identify the battery-charging schedule, relying only on the hourly price profile, regardless of the specific facility’s consumption, thanks to some simplifying assumptions in the sizing and the operation of the battery. This could be particularly useful when the customer load profile cannot be scheduled with sufficient reliability, because of the uncertainty inherent in load forecasting. The motivation behind this research is that storage devices can help to lower the average electricity prices, increasing flexibility and fostering the integration of renewable sources into the power system.

Suggested Citation

  • Enrico Telaretti & Mariano Ippolito & Luigi Dusonchet, 2015. "A Simple Operating Strategy of Small-Scale Battery Energy Storages for Energy Arbitrage under Dynamic Pricing Tariffs," Energies, MDPI, vol. 9(1), pages 1-20, December.
    • Handle: RePEc:gam:jeners:v:9:y:2015:i:1:p:12-:d:61318
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    References listed on IDEAS

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    2. Lucrezia Manservigi & Mattia Cattozzo & Pier Ruggero Spina & Mauro Venturini & Hilal Bahlawan, 2020. "Optimal Management of the Energy Flows of Interconnected Residential Users," Energies, MDPI, vol. 13(6), pages 1-21, March.
    3. Telaretti, E. & Graditi, G. & Ippolito, M.G. & Zizzo, G., 2016. "Economic feasibility of stationary electrochemical storages for electric bill management applications: The Italian scenario," Energy Policy, Elsevier, vol. 94(C), pages 126-137.
    4. Shabani, Masoume & Wallin, Fredrik & Dahlquist, Erik & Yan, Jinyue, 2023. "The impact of battery operating management strategies on life cycle cost assessment in real power market for a grid-connected residential battery application," Energy, Elsevier, vol. 270(C).
    5. Hong-Chao Gao & Joon-Ho Choi & Sang-Yun Yun & Hak-Ju Lee & Seon-Ju Ahn, 2018. "Optimal Scheduling and Real-Time Control Schemes of Battery Energy Storage System for Microgrids Considering Contract Demand and Forecast Uncertainty," Energies, MDPI, vol. 11(6), pages 1-15, May.
    6. Dusonchet, L. & Favuzza, S. & Massaro, F. & Telaretti, E. & Zizzo, G., 2019. "Technological and legislative status point of stationary energy storages in the EU," Renewable and Sustainable Energy Reviews, Elsevier, vol. 101(C), pages 158-167.

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