Evaluating the economic impact of lithium-ion battery degradation on grid-scale applications : Comparative analysis of ancillary services and dayahead arbitrage use cases in Sweden

Sammanfattning

With the rapid integration of renewable energy sources and the dynamic evolution of grid operations, ancillary services have become indispensable for maintaining grid stability. However, the utilization of batteries for these services raises concerns about their longevity and overall performance. This study focuses on investigating the impact of participating in ancillary services on the degradation of largescale lithium iron phosphate (LFP) battery energy storage systems (BESS) within the context of the Swedish energy market. Using a literature-based degradation model, this thesis examines several carefully chosen use cases that represent the potential utilization of grid-scale BESS in Sweden, encompassing all accessible ancillary services such as fast frequency reserve (FFR), frequency containment reserve normal (FCRN), frequency containment reserve disturbance (FCR-D), and arbitrage. Operational simulations for each use case are conducted using real-world frequency and price data from 2022. The degradation model is fitted to represent realistic degradation of a LFP battery and the impact of cycling and storage conditions thanks to experimental data from literature. The study presents degradation profiles and estimates the associated lifetime for each use case, shedding light on the impact of battery cycling and storage conditions on the battery capacity fade Moreover, the analysis explores the economic implications of battery degradation, offering insights into the intricate trade-offs between revenue generation from ancillary services and the costs due to reductions in battery life expectancy. In conclusion, this research contributes to a deeper understanding of the interplay between ancillary services participation and battery degradation, providing valuable insights for stakeholders in the energy sector to formulate sustainable and cost-efficientstrategies for BESS deployment and operation in Sweden.