System cost-minimizing scheduling of battery energy storage systems providing energy and balancing services

To ensure that battery energy storage systems (BESSs) are used to facilitate the operation of power systems with high shares of variable renewable energy (VRE) sources, new policies for BESSs are currently being designed. This paper presents a new model for the system cost-minimizing scheduling of BESSs providing energy and balancing services, which can be used as a policy-evaluation tool and as a benchmark for evaluating current market performance. The model is based on a stochastic optimization problem, which we suggest solving using an algorithm combining Benders Decomposition (BD) and Stochastic Dual Dynamic Programming (SDDP). In this paper, we apply the model to study how the system cost-minimal scheduling of BESSs in Sweden is impacted by new requirements for Limited Energy Reservoir (LER) resources providing Frequency Containment Reserves (FCR). Case study results show that new requirements related to guaranteeing a minimum full activation time significantly impact the operation of BESSs, reducing the provision of upregulating FCR capacity for disturbances (FCR-D up) by over 60 %. Also, the case study results show that the consideration of BESSs’ degradation costs reduces the provision of energy as well as balancing services from BESSs. The daily discharged energy from BESSs is more than 85 % lower if the degradation costs are considered, compared to if they are not considered.