Evaluating Battery Degradation Models in Rolling-Horizon BESS Arbitrage Optimization

Battery Energy Storage Systems (BESS) can benefit from price volatility in electricity markets, but frequent cycling increases degradation and reduces long-term value. This study develops a rolling-horizon dispatch framework in which battery operation is fully price-driven, while degradation is evaluated separately to isolate the effect of degradation model choice. A 48 h look-ahead window is solved repeatedly and advanced by 24 h, with only the first 24 h of decisions implemented and remaining capacity carried forward. Degradation is assessed using three widely used model classes: Linear-Calendar (LC), Energy-Throughput (ET), and Cycle-Based rainflow (CB) models. The framework is applied to Electric Reliability Council of Texas (ERCOT) 15 min real-time prices for 2024 (Houston Zone). LC and ET result in limited annual capacity loss (≈2%) and modest economic impact, while the CB model predicts substantially higher degradation and large negative valuation. Sensitivity analysis shows that CB-based results are highly dependent on parameter calibration. Overall, the results highlight the strong influence of degradation modeling choices on BESS valuation under rolling-horizon operation.