Energy storage cabinet price and profit calculation method

Abstract: As one kind of energy storage (ES) applications, ES can respond to electricity prices and help electricity users obtain economic benefits. In detail, by storing electricity during low price period and releasing power energy during high price period, ES can obtain price arbitrage or lower the energy cost for power consumers.

To simplify the equation, let E p r i c e n be the energy price for charging in year n, described by E p r i c e n = e p r i c e (1 + r e p) n.

This could be a mistake though, because there is no more curtailed solar to charge the devices, which means that the LCOE for the second set of energy storage investments would be $0.04/kWh plus $0.06/kWh from charging with existing, dispatchable generators.

As such, the overnight capital costs will be normalized to the amount of energy discharged per cycle at the rated depth of discharge. This yields units of d o l l a r s 0 / kWh / cycles = d o l l a r s 0 ∗ cycles / kWh.

Because the driving factor behind the profitability of energy arbitrage, which is the buying of energy during low-price periods and selling it back during relatively higher price periods, is the spread between prices, not the sale price, LCOE becomes less meaningful in this context except in the case of a generation-storage hybrid plant.

For the following equations, remember the nameplate capacity is equal to the number of kilo-watt hours that are discharged per n-cycle. In the context of determining the cost of a project that will be charged and discharged many times, it is more useful to normalize the costs to the energy discharged per cycle.