IDEAS home Printed from https://ideas.repec.org/a/gam/jsusta/v15y2023i23p16331-d1288448.html
   My bibliography  Save this article

Economic Viability Assessment of Neighbourhood versus Residential Batteries: Insights from an Australian Case Study

Author

Listed:
  • Soheil Mohseni

    (Institute for Sustainable Futures, University of Technology Sydney, Sydney, NSW 2007, Australia)

  • Jay Rutovitz

    (Institute for Sustainable Futures, University of Technology Sydney, Sydney, NSW 2007, Australia)

  • Heather Smith

    (Institute for Sustainable Futures, University of Technology Sydney, Sydney, NSW 2007, Australia)

  • Scott Dwyer

    (Institute for Sustainable Futures, University of Technology Sydney, Sydney, NSW 2007, Australia)

  • Farzan Tahir

    (Institute for Sustainable Futures, University of Technology Sydney, Sydney, NSW 2007, Australia)

Abstract

Amidst the evolving paradigms of the contemporary energy landscape, marked by the imperative of sustainability and efficiency, the integration of energy storage has emerged as a transformative strategy that seeks to recalibrate the dynamics of electricity distribution and consumption. However, there remains a pressing need to determine the most economically viable approach for deploying energy storage solutions in residential low-voltage (LV) feeders, especially in rural areas. In this context, this paper presents the results of an economic evaluation of energy storage solutions for a residential LV feeder in a rural town in Australia. Specifically, the study compares the financial viability of a front-of-the-meter (FTM) battery installed on the feeder with that of a fleet of behind-the-meter (BTM) batteries. The FTM battery, with a size of 100 kW/200 kWh, is assumed to be operated by the retailer but owned by the community, with any profits assigned to the community. In this scenario, we studied a battery operating under standard network tariffs and three different trial tariffs that distribution network service providers currently offer in Australia. On the other hand, the fleet of BTM batteries (3 kW, 3.3 kWh) are individually owned by households with solar installations, and their cumulative capacity matches that of the FTM battery. The comparison is based on key economic parameters, including network charges, retail margins, frequency control ancillary service (FCAS) revenues, wholesale energy costs, technology costs associated with community batteries, and net profit or loss for the community, as well as considerations of utility grid arbitrage and solar photovoltaic (PV) self-consumption. The study also assumes different grant levels to assess the impact of subsidies on the economic feasibility for both battery configurations. The findings indicate that, while both require some form of subsidy for profitability, the BTM batteries outperform the FTM battery in terms of economic viability and so would require lower grant support. The FTM battery case finds a need for grants ranging from 75% to 95% to break even, while the BTM fleet requires approximately 50% in grants to achieve a similar outcome. In conclusion, this study highlights the importance of grant support in making energy storage solutions economically feasible. In particular, it highlights how the less mature segment of FTM batteries will need higher support initially if it is to compete with BTM. The outcomes of this study inform decision-making processes for implementing energy storage solutions in similar communities, fostering sustainable and cost-effective energy systems.

Suggested Citation

  • Soheil Mohseni & Jay Rutovitz & Heather Smith & Scott Dwyer & Farzan Tahir, 2023. "Economic Viability Assessment of Neighbourhood versus Residential Batteries: Insights from an Australian Case Study," Sustainability, MDPI, vol. 15(23), pages 1-27, November.
    • Handle: RePEc:gam:jsusta:v:15:y:2023:i:23:p:16331-:d:1288448
    as

    Download full text from publisher

    File URL: https://www.mdpi.com/2071-1050/15/23/16331/pdf
    Download Restriction: no
    File URL: https://www.mdpi.com/2071-1050/15/23/16331/
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Tushar, Wayes & Yuen, Chau & Saha, Tapan K. & Morstyn, Thomas & Chapman, Archie C. & Alam, M. Jan E. & Hanif, Sarmad & Poor, H. Vincent, 2021. "Peer-to-peer energy systems for connected communities: A review of recent advances and emerging challenges," Applied Energy, Elsevier, vol. 282(PA).
    2. Cardoso, Gonçalo & Brouhard, Thomas & DeForest, Nicholas & Wang, Dai & Heleno, Miguel & Kotzur, Leander, 2018. "Battery aging in multi-energy microgrid design using mixed integer linear programming," Applied Energy, Elsevier, vol. 231(C), pages 1059-1069.
    3. Henni, Sarah & Staudt, Philipp & Weinhardt, Christof, 2021. "A sharing economy for residential communities with PV-coupled battery storage: Benefits, pricing and participant matching," Applied Energy, Elsevier, vol. 301(C).
    4. Parra, David & Patel, Martin K., 2016. "Effect of tariffs on the performance and economic benefits of PV-coupled battery systems," Applied Energy, Elsevier, vol. 164(C), pages 175-187.
    5. Milad Zeraatpisheh & Reza Arababadi & Mohsen Saffari Pour, 2018. "Economic Analysis for Residential Solar PV Systems Based on Different Demand Charge Tariffs," Energies, MDPI, vol. 11(12), pages 1-19, November.
    6. Axel Gautier & Julien Jacqmin, 2020. "PV adoption: the role of distribution tariffs under net metering," Journal of Regulatory Economics, Springer, vol. 57(1), pages 53-73, February.
    7. Tushar, Wayes & Saha, Tapan Kumar & Yuen, Chau & Azim, M. Imran & Morstyn, Thomas & Poor, H. Vincent & Niyato, Dustin & Bean, Richard, 2020. "A coalition formation game framework for peer-to-peer energy trading," Applied Energy, Elsevier, vol. 261(C).
    8. Barbour, Edward & Parra, David & Awwad, Zeyad & González, Marta C., 2018. "Community energy storage: A smart choice for the smart grid?," Applied Energy, Elsevier, vol. 212(C), pages 489-497.
    9. F.G. Reis, Inês & Gonçalves, Ivo & A.R. Lopes, Marta & Henggeler Antunes, Carlos, 2021. "Business models for energy communities: A review of key issues and trends," Renewable and Sustainable Energy Reviews, Elsevier, vol. 144(C).
    10. van der Stelt, Sander & AlSkaif, Tarek & van Sark, Wilfried, 2018. "Techno-economic analysis of household and community energy storage for residential prosumers with smart appliances," Applied Energy, Elsevier, vol. 209(C), pages 266-276.
    11. Tostado-Véliz, Marcos & Rezaee Jordehi, Ahmad & Amir Mansouri, Seyed & Jurado, Francisco, 2022. "Day-ahead scheduling of 100% isolated communities under uncertainties through a novel stochastic-robust model," Applied Energy, Elsevier, vol. 328(C).
    12. Parra, David & Norman, Stuart A. & Walker, Gavin S. & Gillott, Mark, 2016. "Optimum community energy storage system for demand load shifting," Applied Energy, Elsevier, vol. 174(C), pages 130-143.
    13. Tushar, Wayes & Saha, Tapan Kumar & Yuen, Chau & Morstyn, Thomas & McCulloch, Malcolm D. & Poor, H. Vincent & Wood, Kristin L., 2019. "A motivational game-theoretic approach for peer-to-peer energy trading in the smart grid," Applied Energy, Elsevier, vol. 243(C), pages 10-20.
    14. Bashir, Muhammad Farhan & Pan, Yanchun & Shahbaz, Muhammad & Ghosh, Sudeshna, 2023. "How energy transition and environmental innovation ensure environmental sustainability? Contextual evidence from Top-10 manufacturing countries," Renewable Energy, Elsevier, vol. 204(C), pages 697-709.
    15. Andrew Burlinson & Monica Giulietti, 2018. "Non-traditional business models for city-scale energy storage: evidence from UK case studies," Economia e Politica Industriale: Journal of Industrial and Business Economics, Springer;Associazione Amici di Economia e Politica Industriale, vol. 45(2), pages 215-242, June.
    16. Wen, Kerui & Li, Weidong & Yu, Samson Shenglong & Li, Ping & Shi, Peng, 2022. "Optimal intra-day operations of behind-the-meter battery storage for primary frequency regulation provision: A hybrid lookahead method," Energy, Elsevier, vol. 247(C).
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Henni, Sarah & Staudt, Philipp & Weinhardt, Christof, 2021. "A sharing economy for residential communities with PV-coupled battery storage: Benefits, pricing and participant matching," Applied Energy, Elsevier, vol. 301(C).
    2. Zhang, Yijie & Ma, Tao & Yang, Hongxing, 2022. "Grid-connected photovoltaic battery systems: A comprehensive review and perspectives," Applied Energy, Elsevier, vol. 328(C).
    3. Zheng, Boshen & Wei, Wei & Chen, Yue & Wu, Qiuwei & Mei, Shengwei, 2022. "A peer-to-peer energy trading market embedded with residential shared energy storage units," Applied Energy, Elsevier, vol. 308(C).
    4. He, Li & Liu, Yuanzhi & Zhang, Jie, 2021. "Peer-to-peer energy sharing with battery storage: Energy pawn in the smart grid," Applied Energy, Elsevier, vol. 297(C).
    5. Chen, Liudong & Liu, Nian & Li, Chenchen & Zhang, Silu & Yan, Xiaohe, 2021. "Peer-to-peer energy sharing with dynamic network structures," Applied Energy, Elsevier, vol. 291(C).
    6. Siripha Junlakarn & Phimsupha Kokchang & Kulyos Audomvongseree, 2022. "Drivers and Challenges of Peer-to-Peer Energy Trading Development in Thailand," Energies, MDPI, vol. 15(3), pages 1-25, February.
    7. Roberts, Mike B. & Bruce, Anna & MacGill, Iain, 2019. "Impact of shared battery energy storage systems on photovoltaic self-consumption and electricity bills in apartment buildings," Applied Energy, Elsevier, vol. 245(C), pages 78-95.
    8. Walker, Awnalisa & Kwon, Soongeol, 2021. "Design of structured control policy for shared energy storage in residential community: A stochastic optimization approach," Applied Energy, Elsevier, vol. 298(C).
    9. Karami, Mahdi & Madlener, Reinhard, 2022. "Business models for peer-to-peer energy trading in Germany based on households’ beliefs and preferences," Applied Energy, Elsevier, vol. 306(PB).
    10. Gjorgievski, Vladimir Z. & Cundeva, Snezana & Georghiou, George E., 2021. "Social arrangements, technical designs and impacts of energy communities: A review," Renewable Energy, Elsevier, vol. 169(C), pages 1138-1156.
    11. Azim, M. Imran & Tushar, Wayes & Saha, Tapan K. & Yuen, Chau & Smith, David, 2022. "Peer-to-peer kilowatt and negawatt trading: A review of challenges and recent advances in distribution networks," Renewable and Sustainable Energy Reviews, Elsevier, vol. 169(C).
    12. Wang, Ni & Liu, Ziyi & Heijnen, Petra & Warnier, Martijn, 2022. "A peer-to-peer market mechanism incorporating multi-energy coupling and cooperative behaviors," Applied Energy, Elsevier, vol. 311(C).
    13. Koirala, Binod Prasad & van Oost, Ellen & van der Windt, Henny, 2018. "Community energy storage: A responsible innovation towards a sustainable energy system?," Applied Energy, Elsevier, vol. 231(C), pages 570-585.
    14. Sturmberg, B.C.P. & Shaw, M.E. & Mediwaththe, C.P. & Ransan-Cooper, H. & Weise, B. & Thomas, M. & Blackhall, L., 2021. "A mutually beneficial approach to electricity network pricing in the presence of large amounts of solar power and community-scale energy storage," Energy Policy, Elsevier, vol. 159(C).
    15. Scheller, Fabian & Burkhardt, Robert & Schwarzeit, Robert & McKenna, Russell & Bruckner, Thomas, 2020. "Competition between simultaneous demand-side flexibility options: the case of community electricity storage systems," Applied Energy, Elsevier, vol. 269(C).
    16. Parra, David & Patel, Martin K., 2019. "The nature of combining energy storage applications for residential battery technology," Applied Energy, Elsevier, vol. 239(C), pages 1343-1355.
    17. Tushar, Wayes & Yuen, Chau & Saha, Tapan K. & Morstyn, Thomas & Chapman, Archie C. & Alam, M. Jan E. & Hanif, Sarmad & Poor, H. Vincent, 2021. "Peer-to-peer energy systems for connected communities: A review of recent advances and emerging challenges," Applied Energy, Elsevier, vol. 282(PA).
    18. Gržanić, M. & Capuder, T. & Zhang, N. & Huang, W., 2022. "Prosumers as active market participants: A systematic review of evolution of opportunities, models and challenges," Renewable and Sustainable Energy Reviews, Elsevier, vol. 154(C).
    19. Ableitner, Liliane & Tiefenbeck, Verena & Meeuw, Arne & Wörner, Anselma & Fleisch, Elgar & Wortmann, Felix, 2020. "User behavior in a real-world peer-to-peer electricity market," Applied Energy, Elsevier, vol. 270(C).
    20. Hahnel, Ulf J.J. & Herberz, Mario & Pena-Bello, Alejandro & Parra, David & Brosch, Tobias, 2020. "Becoming prosumer: Revealing trading preferences and decision-making strategies in peer-to-peer energy communities," Energy Policy, Elsevier, vol. 137(C).

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:gam:jsusta:v:15:y:2023:i:23:p:16331-:d:1288448. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: MDPI Indexing Manager (email available below). General contact details of provider: https://www.mdpi.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.