Optimal Sizing of Battery Energy Storage Capacity Considering Demand Charge for Industrial Loads

Renewable energy sources (RES) are highly demanded to limit the greenhouse gas emissions arising from fossil fuel-based electricity generation. Concurrently, RES are intermittent by nature; therefore, a battery energy storage system (BESS) is needed to fulfill the continuous electricity demands around the clock. Industrial customers have to pay a demand charge, determined by their peak load demand. BESS can effectively bring down the demand charge for industrial customers by reducing their peak demands. However, a significant capital cost is incurred in deploying the BESS. This paper presents a feasibility study for a typical Finnish industrial load to evaluate its net energy cost amid on-site BESS deployment. The major contribution of this paper is to determine an optimum size of the battery for an industrial facility which helps in reducing the demand charge, coping with power outages/interruption and reduce burden on the grid during peak hours. An optimization model has been presented to determine the optimal size of BESS and minimize the operational cost for the industry which includes peak shaving and minimization of demand charge over a certain duration. The results show that a reduction of up to 8% peak demand and hence savings in demand charge while incorporating the battery investment cost. The proposed model brings reductions in energy procurement costs, shifts peak demands, and copes with power outages, thereby enhancing the stability and reliability of the power supply.