Techno-economic analysis of Battery Energy Storage Systems and Demand Side Management for peak load shaving in Swedish industries

Abstract: The Swedish electrical grid has historically been robust and reliable, but with increased electrification in numerous sectors, out-phasing of nuclear power and a high market diffusion of wind power, the system is now facing challenges. The rotational energy in the system is expected to decrease as a result of higher shares of intermittent energy sources, which can affect the stability of the grid frequency negatively. To manage increased frequency drops, the new Fast Frequency Reserve (FFR) market will be implemented by June 2020 in the Nordic power system. Simultaneously, it is expected that the demand of electricity will increase significantly in the transport and industry sectors in the coming years. Several DSOs already today indicate challenges with capacity and power security and have or will implement power tariffs as an economic incentive to prevent these problems. For energy intensive customers, such as industries, it will become important to reduce power peaks to avoid high grid fees. Several peak load shaving strategies can be utilized by industries to reduce their power peaks and thus the power tariff. The aim of this study is to economically analyze peak load shaving for Swedish industries. This is done using Li-Ion BESS and DSM, and to maximize the utilization of the BESS by including energy arbitrage and FFR market participation into the analysis. Firstly, a literature review is conducted within the topics of peak load shaving strategies, energy arbitrage and ancillary services. Secondly, data is gathered in collaboration with WSP Systems – Energy, the initiators of the project, to conduct case studies on two different industries. These cases are simulated in the modeling software SAM, for technical analysis, and then economically evaluated with NPV. Also, nine scenarios are created for the emerging FFR market concerning the number of activations per year and the compensation price per activation. The results from the case studies indicate that peak load shaving of 1 – 3 % with BESS provides a positive NPV for both case industries. However, higher percentages result in negative NPVs when no additional revenue streams are included. When considering energy arbitrage, it is concluded that the additional revenues are neglectable for both industries. Participating in the FFR market provides similar trends in the results as before. The exception is valid for scenarios with high numbers of FFR activations and compensation prices, where positive NPVs for all levels of peak load shaving can be concluded. The peak load shaving strategy DSM is implemented for one of the industries, where efficiency measures are concluded to have the most impact on the economic evaluation. If all efficiency measures would be implemented, the electricity consumption would be reduced by 17 %. Additionally, the power peaks would be reduced with 18 % and result in a significantly more positive NPV than peak load shaving using BESS. A sensitivity analysis concerning BESS capital cost and power tariff price concludes that the BESS price has a strong relation to the NPV, where a BESS price reduction of 60 % results in an NPV increase of at least 100 %. BESS prices have decreased the past years and are expected to keep decreasing in the future. Hence, investments in BESS can become more profitable and attractive in the coming years. Finally, for future research, it is recommended to combine the methodology from this study together with a load forecasting method. This combined methodology could then be practically applied to case specific industries with high peak loads.