BESS degradation effects over operational and investment decisions in power system expansion planning

Lithium-ion batteries, through Battery Energy Storage Systems (BESS), have emerged as a complement to renewable energy by smoothing its generation intermittency and variability in power systems. However, this technology entails important nonlinear and nonconvex storage degradation processes, making the study of BESS investment and operational decisions more difficult in power systems. To overcome this challenge, it is common to incorporate unrealistic simplifications and cost signals without technical operational modeling. This work proposes incorporating a piece-wise linear approximation of the BESS degradation function and a cycle-counting iterative method, in a long-term power system expansion planning model. The incorporation of the degradation function is managed through Special Ordered Sets of type 2 (SOS2) constraints and the iterative estimation of cycles in the operational decision process, avoiding nonlinearities, but keeping the operational veracity of BESS assets. Our results show that ignoring degradation would overestimate the optimal investment cost level of BESS systems and underestimate the system operational cost. Six degradation-process experiments are evaluated: one for no aging consideration, three considering calendar aging (i.e., independent of the BESS operation), one using a cycle-counting aging approach and the last one incorporating both cycle-counting and calendar aging, with the last two approaches being the main focus of this work and the ones incorporating a more detailed degradation-process modeling in the power system expansion planning. We found that a more accurate modeling of the degradation process, through a cycle-counting aging or joint cycle-and-calendar aging, reduces the optimal levels of the investment cost and the installed capacity of BESS, avoids aggressive operational profiles of BESS assets, and more accurately reflects the level of curtailment in the power system, resulting in relevant monetary and operational differences in comparison to the simplified degradation approaches.