Modeling Battery Degradation in Energy and Performance-Based Regulation Markets

The growing share of uncertain and variable power generation sources has led independent system operators (ISOs) to seek resources with fast ramp rates for frequency regulation. Recent improvements in battery energy storage systems (BESSs) have increased their use in ancillary service markets. The Federal Energy Regulatory Commission also made a provision for ISOs to facilitate the participation of BESSs in the clearing of energy and ancillary service markets by incorporating their physical and operational characteristics through Order No. 841. However, frequent BESS cycling causes degradation that results in decreased battery life. Thus, battery degradation should be incorporated into the usage pricing in different markets. This paper proposes a mathematical formulation to model the degradation cost of different battery technologies. Further, a market-clearing framework for the co-optimized energy and performance-based regulation markets is proposed. The effects and costs associated with battery degradation are considered in both energy and regulation scheduling. Suitable case studies comparing the effect of the degradation cost of different battery technologies in the proposed market-clearing framework are performed on the standard IEEE test system.