Neighbourhood-scale battery energy storage system revenue optimisation in distribution networks: Impact of price forecasts

The uptake of renewable energy resources poses challenges for electricity networks, including balancing supply and demand and managing grid stability. Neighbourhood-scale battery energy storage systems (N-BESS) on the distribution network can offer services such as peak shaving, load shifting and frequency regulation, enabling higher levels of variable renewable energy integration and deferring costly network upgrades. Most studies that focus on optimising the size and operation of an N-BESS assume a perfect forecast of future prices, which is not appropriate for real-world applications. This paper develops a mixed-integer linear programming model to optimise the operation of N-BESS within Australia’s National Electricity Market. The model evaluates revenues from both the electricity spot market and frequency control ancillary services markets and uses both perfect and Australian Energy Market Operator (AEMO) pre-dispatch price forecasts along with network tariffs. The study investigates the impacts of varying the pre-dispatch market price forecast accuracy and of differing forecast horizons and update periods on N-BESS revenue and compares the results with those achieved under perfect forecast conditions. The findings are that market volatility significantly affects N-BESS performance especially using AEMO’s pre-dispatch forecasts, with revenue reductions of up to 80 % during months with high volatility compared to perfect forecasts. Incorporating a real-time wholesale market price threshold of $1000/MWh into the optimisation model achieved optimal revenue improvement using AEMO pre-dispatch price forecasts by better capturing high-value price spikes. A minimum 8-hour forecast horizon was required to optimise revenue which increased with more frequent forecast updates. • Spot market and FCAS were the two main revenue streams for N-BESS. • Spot market volatility had the greatest influence on N-BESS revenue. • Revenue with a perfect forecast can be up to 80 % higher than with pre-dispatch forecasts. • A minimum forecast horizon of 8 h is recommended to maximises N-BESS revenue. • The use of price thresholds can increase revenue under pre-dispatch forecasts.