Journal of Energy Storage 29 (2020) 101373

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Journal of Energy Storage

journal homepage: www.elsevier.com/locate/est

Economic feasibility of battery energy storage systems for replacing peak T

power plants for commercial consumers under energy time of use tariffs
Julio Romel Martinez-Bolanosa, Miguel Edgard Morales Udaetaa, André Luiz Veiga Gimenesa,
⁎
Vinícius Oliveira da Silvaa,
a
GEPEA/EPUSP – Energy Group of the Department of Energy and Electrical Automation Engineering of the Polytechnic School, University of São Paulo, Av. Professor
Luciano Gualberto, Travessa 3, no 158, Prédio da Engenharia Elétrica, São Paulo, Brazil

A R T I C LE I N FO A B S T R A C T

Keywords: This work assesses the economic feasibility of replacing conventional peak power plants, such as Diesel
Solar energy Generator Sets (DGS), by using distributed battery energy storage systems (BESS), to implement Energy Time
Battery Energy Storage System (BSS) Shift during peak hours for commercial consumers, whose energy prices vary as a function of energy time of use
Energy time shift (ToU tariffs). The economic analysis is performed by calculating the break-even point (BEP) for four different
BESS technical-economical evaluation
battery technologies: (i) lead-acid (OPzS); (ii) nickel-cadmium (NiCd); (iii) lithium-ion (Li-NCA); and (iv) Redox
Flow (FeCr), using the HOMER Energy software in the simulations. One case study is analyzed for a commercial
consumer connected to the MV network (Campinas/Brazil). The results show that, considering the updated 2018
BESS costs, none of the types of battery analyzed is economically attractive as a replacement for DGS. However,
it can be observed that a 31%, 38% and 26% reduction in the costs of OPzS, Li-NCA and FeCr batteries, re-
spectively, makes the installation of BESS viable. It is estimated that, in a 5- to 6-year horizon, these technologies
would become economically attractive as a result of the strong decrease of the expected costs for the years to
come.

1. Introduction construction times generators [7].

The current model for power generation, transmission, distribution
and consumption has proved to be unsustainable. These features ap-
peared in the past, when many countries changed their whole systems
(structurally and institutionally) [1], and, most importantly, enabled
the introduction of new renewable energy and distributed generation
technologies [2]. This insertion impacts the development of technolo-
gies to support and to improve the integration of intermittent renew-
able energy sources [3] and may provide for the reduction of the
number of isolated communities without access to the conventional grid
system, which to date is significant [4].
This new model can occur without increasing carbon dioxide (CO2)
emissions; many countries have become industrialized without sig-
nificantly increasing their CO2 emissions, and there is no reason to
believe that this cannot be done even in developing countries [5]. This
new model will provide a major inclusion of renewable technologies in
the portfolio of the future energy industry [6]. The existing market,
commercial, and regulatory structures can present barriers to the timely
and cost-effective connection of renewable generation, since they may
not be flexible enough to allow for smaller, dispersed, and shorter
Generation is made in a centralized manner and it is later trans-
ported and distributed to consumer units that are very far from the
generation sources, requiring a great deal of resources to build and to
maintain these systems, besides causing congestion in the grids and,
thus, a direct impact on electricity prices for the final consumer [8].
To minimize this situation, most electric utilities apply tariffs that
change as a function of energy time of use (ToU tariffs), in which the
electricity costs are divided into two or three periods throughout the
day, based on the profile of the demand [9,10]. This pricing structure
provides price signals for the final users, aiming at shifting energy
consumption to periods outside the utility expensive peak hours [11].
However, because of the nature of their activities, some industrial,
commercial and service consumers cannot simply shift their energy
consumption without significantly affecting their production [12]. The
problem is that the increasing demand for electricity is closely related
to the need for reinforcements in the transmission and distribution
(T&D) facilities or for increasing the acquisition of rights of way, which
may be exposed to excessive implementation costs [1]. However, these
reinforcements are difficult to implement, especially due to environ-
mental constraints [1,13]. Consequently, over the last few years, the

⁎
Corresponding author
E-mail addresses: julioromel@usp.br (J.R. Martinez-Bolanos), udaeta@pea.usp.br (M.E.M. Udaeta), vinicius.oliveira.silva@usp.br (V.O.d. Silva).

https://doi.org/10.1016/j.est.2020.101373
Received 27 November 2019; Received in revised form 20 February 2020; Accepted 12 March 2020
Available online 20 March 2020
2352-152X/ © 2020 Elsevier Ltd. All rights reserved.
J.R. Martinez-Bolanos, et al. Journal of Energy Storage 29 (2020) 101373

cost of electrical energy at peak hours has become increasingly ex- several works [42,53–58]. It is capable of properly modeling the battery
pensive, reaching values between three to four times the price of the dynamic characteristics of interest, such as state of charge (SOC), state
tariff outside peak hours [14]. of health (SOH) and round-trip efficiency. Economic parameters, such
Therefore, to ensure that there will be no substantial increase in the as interest rate, ToU tariffs and O&M costs are also modeled by the
energy bill because of ToU rates, an option that has been widely used by HOMER software.
consumers fed in medium-voltage (MV) is the use of Diesel Generator This article is structured as follows. Section 2 describes the Energy
Sets (DGS) at peak hours. DGSs are more than just alternative sources of Time Shift principles. Section 3 provides a brief overview of the BESS
energy, since they are part of the backup system and can supply energy technologies analyzed herein. Section 4 describes the methodology
in case of power grid failure [15] or when the price of electricity is used in the economic evaluation. Finally, Sections 5 and 6 present the
higher. This type of installation allows using local energy at peak times case study and the conclusions obtained hereof.
to cancel or to reduce electricity consumption from the utility for saving
money [16]. Nevertheless, even though DGSs promote a reduction in
2. Energy time shift
the energy bill, they have the disadvantage of polluting the environ-
ment through greenhouse gases emission [17] and disposal of lubricant
Commercial consumers supplied in MV are usually charged by ToU,
oil, besides the high noise levels [18].
in which the cost of electrical energy (kWh) can substantially vary
Greenhouse gas emission (GEE) should reach its peak in a nearby
throughout the day, depending on the periods pre-established by each
future [19,20], and the decarbonization in the end-use sectors, such as
country [59]. Yet this kind of consumer has traditionally used local
direct use of energy in industries, transportation, and household and
DGSs as a backup source [16]. However, as mentioned before, de-
commercial buildings, must also be increased, given that progress is
pending on the price of the electricity tariff at the peak hours, in many
delayed in these areas [21]. In this context, the use of energy storage
occasions, the use of DGSs in these periods of the day as a replacement
systems to replace conventional peak plants becomes fundamental in
for the grid becomes economically attractive [60].
the transition to the use of sustainable energy systems [22–24]. This has
In this scenario, local energy storage can be inserted as a replace-
led to the need to investigate factors that may disturb the profitability
ment for DGS. In this case, BESS performs the Energy Time Shift. The
of the arbitrage transaction in important electricity markets [25].
battery is charged off the peak hours, when the electrical energy is
Traditionally, storage systems have been based especially on re-
cheaper, and discharged at peak times, when the tariff is more ex-
versible hydropower plants, also known as pumped-storage hydro-
pensive [16,21,26].
power or hydroelectric energy storage [26]. However, in the current
Fig. 1 shows the simplified single-line diagram of a consumer that
scenario of increasing importance of renewable energy sources and
uses DGS as source of backup. DGS is normally connected to the in-
increase in distributed generation, there is a renewed interest in dis-
ternal network of the consumer by an Automatic Transfer Switch (ATS),
tributed electrochemical Battery Energy Storage Systems (BESS)
which automatically transfers the load to the DGS when there are dis-
[27–29]. BESS has the potential to radically change the way society
turbances in the utility network, or in hours pre-established by the
generates and consumes electricity, not only helping the operation of
consumer.
future electrical grids in a reliable manner, but also allowing energy
In this case, the BESS can be inserted in the consumers’ electric
management in consuming installations [30–34].
network without major modifications, using the maneuver and pro-
In this context, BESS becomes particularly attractive to promote a
tection equipment routinely installed in conventional ATS, such as
shift in energy consumption hours (Energy Time Shift) of MV con-
overcurrent (ANSI 50/51), under and overvoltage (ANSI 27/59), and
sumers, replacing the use of conventional sources, such as DGSs, at peak
synchronizing (ANSI 25) relays, among others.
hours. BESS makes implementing this strategy more flexible, allowing
In an economic scenario favorable to installing BESS, DGS would
users to purchase and to store energy in the battery when the cost of
become idle, and would only be used as a backup source for BESS at
electricity (kWh) is low, and consume this energy later, when the cost of
moments when the battery reaches SOCs that are too low or when the
electricity is high [35–38]. However, batteries are subject to economic
BESS is under maintenance, and the grid is unavailable, or its cost is not
and operational limitations, since they are degradable systems with a
economically attractive.
rather limited service life [34,39–41]. Consequently, in order to ensure
As observed, when BESS is operating under Energy Time Shift, the
economic feasibility, it is necessary to thoroughly assess the costs in-
consumer's load profile, measured on the interface with the utility,
volved in this application [42], since very few battery technologies are
radically changes. During the peak hours, there is no power consump-
currently price competitive and require a lot of upfront capital invest-
tion from the utility, since the battery supplies the entire energy for the
ment [43].
load. Conversely, during off-peak hours, the battery is charged,
The use of BESS in distribution networks, i.e., close to the final
users, has been widely discussed in the literature [11,13,28,44–47].
However, most of these studies are limited to assessing the impact of
BESS from the point of view of the benefits obtained by the utility with
the deferral/optimization of the investments in T&D networks
[25,48,49]. The few studies that assess the benefits of BESS from the
consumers’ point of view [36,50] only analyze the gains from the dif-
ference between electricity tariffs applied at peak and off-peak hours
[39,51]. However, an economic feasibility analysis that considers the
replacement of conventional peak plants for BESS has yet to be ap-
proached.
The goal of this article is to present a cost-benefit analysis (CBA) of
replacing DGSs for BESS, in order to implement Energy Time Shift in
MV consumers at peak hours. The analysis targets commercial con-
sumers that carry out Energy Time Shift on a daily basis and that pre-
sent a rather flat load profile.
The HOMER Energy software, developed by the National Renewable
Energy Laboratory (NREL), is used in the analyses. HOMER [52] pro-
vides a suitable technical-economic simulation platform, as used in Fig. 1. Schematic diagram of energy time-shift

2
J.R. Martinez-Bolanos, et al.
Fig. 2. Block diagram of the BESS
increasing the consumer's demand. However, the off-peak hours have a
considerably longer duration than peak hours. For this reason, the en-
ergy required to charge the battery can be diluted into a relatively long-
time span, without significantly increasing the demand of the consumer
unit outside peak hours.
Note, however, that commercial consumers do not operate devices
that require a significant amount of electric power on relatively short
time spans, as it is the case of industrial consumers, as its demand curve
is rather flat. In this case, the penalties for exceeding the contract de-
mand is not usually a problem, making the Energy Time Shift much
more attractive than a simple Peak-shaving from the economic per-
spective.
3. Battery energy storage system
Every commercially available BESS has a similar project and is ba-
sically composed of: series/parallel arrangement of electrochemical
batteries; power conversion system (PCS); and the components that are
necessary to preserve the system safety and reliability, called balance of
plant (BOP) [45], see Fig. 2. Four types of battery were considered
herein.
3.1. Lead-acid batteries
Lead-acid batteries are currently the most mature battery system,
with the lowest cost among electrochemical storage technologies. They
have been used as backup batteries in power plants and substations for
years, performing an extremely important role in the reliable operation
of the power systems [61,62].
Regarding the constructive characteristics of the electrodes, lead-
acid batteries can be classified as flat plate batteries and tubular plate
batteries (stationary). The most common battery is the simple lead-acid
battery composed of flat plates and liquid electrolyte, due to its ex-
tensive use as automotive battery. To favor the performance of the
battery in a short period of time, this kind of battery uses thin plates,
although this reduction in thickness also reduces the battery service life.
For this reason, the use of an automotive battery in electrical systems
that demand depth of discharge higher than 50% would quickly become
useless after a few days.
For permanent operations, during periods that range from five to
fifteen years, and for applications in medium- to small-sized BESS,
tubular or stationary plate batteries are the right choice. The tubular
plate technology allows the battery to provide a larger amount of
uniform and reliable energy, in comparison to flat plate batteries of the
same size. Weight, volume and installation cost, which can be two to
three times higher than the other types of lead-acid batteries are the
main characteristics of this solution.
Tubular plate batteries are available as vented battery, type OPzS
(from the German Ortsfeste Panzerplatte Spezial or Special Tubular
3
Journal of Energy Storage 29 (2020) 101373
Plate), which has liquid electrolyte and special separators; or as sealed
valve-regulated lead-acid (VRLA) batteries, type OPzV (from the
German Ortsfeste Panzerplatte Verschlosse or Sealed Stationary Tubular
Plate), with gel electrolyte and safety valves. These products are reli-
able and several decades old, being widely used in autonomous solar
applications.
The tubular plates are particularly stable, which substantially in-
creases the battery life cycle. OPzS batteries require maintenance every
0.5–3.0 years, while OPzV batteries do not require any maintenance
intervention. The perfect room temperature to use stationary batteries
ranges between 20 °C and 30 °C, although temperatures between
−40 °C and 50 °C are tolerated. High temperatures increase self-dis-
charge, reduce service life and cause other adverse effects.
3.2. Nickel-Cadmium batteries
Nickel-cadmium (NiCd) batteries have a physical structure that is
similar to lead-acid batteries, but instead of using lead plates, nickel
hydroxide is used for the positive plates, and cadmium oxide is used for
the negative plates. Potassium hydroxide is used as electrolyte, which is
an alkali as harmful as the sulfuric acid of lead-acid cells [63]. As an
advantage, in comparison to the lead-acid technology, NiCd batteries
are less affected by overcharges and can be completely discharged.
They are not subject to sulfation and can be left discharged, without
causing any harm to the plates. Their charging is not influenced by
temperature and they can be charged by any known or available
methods or chargers, such as decreasing charger, constant current
charger, constant voltage charger or fluctuation.
A disadvantage of NiCd cells, in comparison to lead-acid batteries, is
that the SOC means of measurement are not simple, since there is little
variation in voltage and in the specific weight of the electrolyte during
discharge. Therefore, there is no chance of indicating the moment of
full battery discharge, which is an inconvenient for the users. Nickel-
cadmium batteries can also suffer from a problem called “memory ef-
fect”, which is caused by residues in the battery inducing the formation
of small cadmium blocks. When this happens, the battery no longer
charges completely.
The pioneering and most reliable project for NiCd batteries, first
generation, is the construction of vented pocket plates. The active
materials are encapsulated between folded steel stripes, which are
pierced on both sides. This double-piercing model guarantees a 30%
larger superficial useful area to the plate. The larger the useful area is,
the higher the maximum charging capacity will be. This type of battery
is suitable for autonomous photovoltaic applications, for instance.
Second-generation NiCd batteries, called sintered plate, are
0.4–1.0 mm thinner than the pocket plate, resulting in a lower internal
resistance with better performance for lower temperatures. It is elec-
trically and mechanically resistant, very reliable and demands low
maintenance. However, it has a high and complex manufacturing cost,
since it uses a large amount of nickel and it is unviable for cells larger
than 100 Ah [63].
3.3. Lithium-ion batteries
After taking over the electronics market, lithium-ion (Li-ion) bat-
teries have become the main technology used in electric vehicles.
Driven by research and development in both aforementioned sectors,
the characteristics of lithium-ion batteries have continuously improved.
Currently, because of its excellent performance, high efficiency, quick
response and long service life, this type of battery has also become
attractive for stationary uses involving mass energy storage in a short to
medium term [64].
Li-ion batteries are not of a single type, but a category of batteries
that uses lithium as a component (usually in the cathode and in the
electrolyte). In these batteries, the anodes and cathodes may have dif-
ferent materials in their composition. The most frequently used
J.R. Martinez-Bolanos, et al.
material for the anodes is graphite (C), while cathodes can be made of
several types of materials. The battery most widely used in commercial
applications is the LCO type (lithium cobalt oxide), which is used in
cellphones and laptops, for instance.
In the automobiles in the market, several types of batteries are used:
NCA (lithium nickel cobalt aluminum oxide), LFP (lithium iron phos-
phate) and LMO (lithium manganese oxide). In stationary applications,
with a higher demand for energy rather than for power, the NCA and
LFP cells are more attractive.
These technologies guarantee high power density, minimize weight
and volume and present a long service life, with low maintenance. As a
differential of the NCA technology in comparison to LFP, the former
presents a tilted characteristic of the voltage versus SOC, which sim-
plifies the battery management (SOC estimative) and makes cells bal-
ancing easier.
Li-ion batteries are light and have a long service life. They can be
charged with high currents, like nickel-cadmium batteries, and do not
require complex charging cycles. However, their main disadvantage is
related to safety and balanced operation when the cells are connected in
series and/or in parallel, since the electrolyte operates in a well-defined
voltage range. In case the limits are exceeded, exothermal reactions
may occur, culminating in explosion and battery burning.
To overcome this problem, electronic circuits are used in each of the
cells in order to control its operation, preventing risk conditions
(overload, high temperature, external short-circuit, etc.). If one of the
limits is exceeded, the circuit shuts down the battery, preventing these
risks. Besides protecting the battery, the Battery Management System
(BMS) can monitor these conditions. However, the application of these
special circuits to protect the battery, together with the high prime
material costs, makes manufacturing complex and expensive. Another
disadvantage of ion-lithium batteries lies in the harmful effect that the
deep discharge and operation at high temperatures have on its their life
cycle [27].
Regarding the constructive characteristics of the electrodes, the Li-
ion batteries can be classified into cylindrical and prismatic electrode
batteries. Cylindrical shapes are usually used in small cells (< 4 Ah),
whereas prismatic-shaped flat plates are more common in large cells.
3.4. Redox flow batteries
Redox flow batteries, also known as redox fuel cells, are systems
with two electrolytes, in which both are in the liquid state. They store
and release electrical energy through reversible electrochemical reac-
tions between two saline solution electrolytes, which occur through the
redox fuel cell; the electrolytes circulate in two separate circuits. This
type of battery exceeds the limitations of traditional batteries, which
are limited by the surface area of the solid components of the chemical
reactions.
This technology has the great advantage of easily increasing the
storage capacity, made possible by simply adding electrolyte tanks.
Additionally, they operate at temperatures close to room temperature.
For these storage systems, the costs per kWh decrease as the storage
capacity increases, simply by adding the electrolyte tanks. Its dis-
advantage is being difficult to handle due to the low energy-volume
relationship and the high maintenance costs.
Throughout the years, several types of electrolytes have been de-
veloped. Currently, the mature flow battery technologies include: zinc
(ZnBr); sodium (NaBr); vanadium (VBr); bromine-polysulfide (NaS-
NaBr); and iron-chrome (FeCr) batteries [61,65]. The technologies that
have proved to be the most promising in large-scale energy storage
applications are the VBr and FeCr batteries.
VBr batteries have similar characteristics to every other type of
redox flow batteries previously mentioned; the difference is that va-
nadium can be explored at four different stages of oxidation, making it
possible to replace both electrolytes for a single element – vanadium –
which prevents the degradation of the membrane.
4
Journal of Energy Storage 29 (2020) 101373
Fig. 3. Capital cost of different storage technologies
FeCr batteries are another type of flow battery that, because of their
low cost and zero toxicity, are attractive for large-scale energy storage
solutions, especially in applications involving frequency regulation
[66]. These batteries use iron as electrolyte for the reactions, including
one negative electrode – where the deposition of the electrolyte occurs
–, also known as the galvanizing electrode, and one positive electrode –
where the redox reaction occurs –, also known as the redox electrode
[67].
3.5. Brief analysis of storage cost
Fig. 3 shows the typical 2018 capital costs of the four battery types
considered herein [21,68,69]. Note that the cost per kWh is very de-
pendent on the capacity of the battery, with smaller capacity being
considerably more expensive than those with higher capacity. Site-
specific conditions and some particular requirements depending on the
application may also cause the battery capital costs to vary significantly
from the estimations given here. Therefore, the costs shown in Fig. 3
correspond to a medium-sized commercial and industrial application.
Because Li-ion and Redox batteries are not a single type, but a category
of batteries, the dispersion observed in their costs is greater than for
lead-acid and NiCd batteries.
Li-ion batteries, more specifically LFP batteries, are the most ex-
pensive, with capital costs between $800 and $910 per kWh approxi-
mately. Lead-acid batteries, in contrast, show the lowest installation
costs being roughly $380–$407 per kWh for stationary tubular plate
batteries, OPzS-type. Among Li-ion batteries, NCA technology has the
lowest cost, with costs in the range between $740 and $840/kWh. NiCd
and Flow batteries show average capital costs of $832 and $530 per
kWh, respectively. For NiCd batteries, the cost shown here corresponds
to the pocket plates type (first-generation), the most reliable and rugged
type currently available, suitable for stand-alone photovoltaic applica-
tions. Regarding flow batteries, FeCr technology currently has the
lowest costs being roughly $440–$550 per kWh. The VBr technology is
the most expensive, with capital cost between $500 and $620 per kWh.
4. Methodology
The CBA is carried out through the break-even point (BEP) calcu-
lation for different BESS technologies, considering the singularities of
each type of battery (cost, life cycle, and efficiency), the electricity tariff
and the costs related to the DGS operation.
The cash flow (CFn), generated in the generic year n, can be cal-
culated by the difference between the system annual profit (Pn) and cost
(Cn):
CFn = Pn − Cn (1)
The annual profit corresponds to the sum of the daily economies of the
client (Pd):
J.R. Martinez-Bolanos, et al. Journal of Energy Storage 29 (2020) 101373

365
Pn = ∑ Pd
d=1 (2)
Pd can be calculated by the difference between the energy demanded by
the load (ELoad, h) and the energy consumed from the grid (EGrid, h)
multiplied by the utility tariff (TAh):
24
Pd = ∑ TAh . (ELoad,h − EGrid,h)
h=1 (3)
In turn, the annual cost of the system (Cn) is composed of the costs
related to the BESS purchase and operation (CBESS, n), and the costs
solely related to the DGS operation (CDGS, n), since this equipment is
considered to be part of the client's backup. Therefore, these costs can
Fig. 4. Typical daily load profile
be determined by expressions (4) and (5), respectively:
365
CBESS, n = QBESS . Cpu BESS + ∑ CO&M BESS,d
d=1 (4)
365 365
CDGS, n = Cfuel. ∑ QDGS,d + ∑ CO&M DGS,d
d=1 d=1 (5)
Where QBESS is the BESS capacity (kWh), Cpu BESS are the costs re-
lated to PCS, battery and BOP, expressed in p.u., and CO & M BESS, d is the
O&M cost of BESS. CFuel is the cost of diesel fuel, QDGS is the DGS fuel
consumption and CO & M DGS, d is the DGS operation and maintenance
cost. Once the annual cash flow (CFn) is calculated, the discounted cash
flow (CF0) can be expressed as:
CFn
CF0 =
(1 + i)n (6)
Fig. 5. Histogram of maximum demand and energy consumption at peak times
Where i is the real interest rate (RIR). The net present value (NPV)
of the system is derived from the sum of the discounted cash flows.
Finally, BEP is defined as the hypothetical Cpu BESS value, which allows at the peak hours (i.e. between 6 p.m. and 9 p.m.). The maximum de-
matching the NPV of the system equipped with BESS to the NPV of the mand values and energy consumption are observed to be 140 kW and
system equipped with DGS. 330 kWh, respectively. However, 95% of the time, the maximum de-
By using this methodology, the following assumptions are made: (i) mand and the consumed energy do not exceed 110 kW and 310 kWh,
the system service life is equal to the BESS service life, which depends respectively. Based on this analysis, BESS is dimensioned with 110 kW/
on the technology of the battery used. Thus, the replacement and sal- 310 kWh of useful capacity, in order to carry out Energy Time Shift
vation costs are neglected; (ii) there are neither readjustments in the during the 3 h of the peak hour, with a 95% probability.
electricity tariff nor in the price of the diesel fuel throughout the system The CU also has a DGS, with 170 kVA power rating, which does not
service life; (iii) there is no growth in electrical demand; (iv) the de- operate in permanent parallelism to the utility network. The DGS is
gradation of the battery (loss of useful capacity) is neglected; and (v) connected to the CU internal electrical system through an ATS, located
the BESS operates in unitary power factor. upstream of the main distribution board, making it possible for the DGS
to autonomously meet the full load of the facility, when necessary.
5. Case study Table 1 shows the main technical-economic parameters used in the
simulations (base case). The four battery technologies described in
5.1. Characterization Section 3 are analyzed. The costs are updated to 2018 and correspond
to the market prices charged in the metropolitan region of Campinas,
The case study concentrates on a commercial consumer located in Sao Paulo/Brazil.
the metropolitan region of Campinas, Sao Paulo/Brazil, connected to
the MV network of the CPFL Energia/State Grid, the second largest non- 5.2. Simulation results
state-owned group of power generation and distribution in Brazil
[70,71]. Fig. 6 shows the normalized BEP for the four types of battery,
It is a facility composed of a restaurant/convenience store, a gas considering variations in tariff and cost of diesel fuel. The normalized
station, parking lot and a truck rest area. The Consuming Unit (CU) BEP can vary between 0 and 1 and should be interpreted as the
works non-stop every day of the year, 24 h a day. The electricity tariff is minimum factor by which the Capital Cost-DC [USD/kWh] of each
divided into two parts: energy consumption (kWh) on and off-peak, and battery type, see Table 1, must be multiplied so that BESS can become
one maximum demand (kW) regardless of the time of day, on or off- economically profitable as a substitute for DGS at peak hours. In other
peak. The peak hour corresponds to the consecutive three-hour period, words, low values of normalized BEP imply that a large reduction in the
between 6 p.m. and 9 p.m., except for weekends. price of the battery is necessary to make it economically attractive.
Fig. 4 shows the daily load profile characteristic of the facility. As The graph shows the normalized tariff on one axis and the nor-
can be observed, the load curve is quite flat, typical of a commercial malized fuel price on the other. We normalized the axes with respect to
unit, with the absence of high peaks of consumption at a specific time of the electric tariff at peak times and the fuel price, both referring to the
day; the CU contract demand is 160 kW. base case, i.e., 0.4 USD / kWh and 1.0 USD / L respectively. Therefore,
To better characterize the demand, Fig. 5 shows the histogram of the results for the base case correspond to the coordinates (1,1). The
the maximum demand (kW) and energy consumption (kWh) registered graph shows a variation between 0.95 and 1.2 for the electric tariff and

5
J.R. Martinez-Bolanos, et al. Journal of Energy Storage 29 (2020) 101373

Table. 1
Technical-economic parameters used in the case study simulations
Grid Tariff peak/off-peak [USD/kWh] 0.4 / 0.14
Demand charges [USD/kW] 3.22

DGS DGS efficiency [20,60,100] % Pnom [21,32,36]

Diesel fuel price [USD/L] 1.0
BESS BESS useful capacity [kW/kWh] 110 / 310
N. cycles per year 260
Capital Cost – AC [USD/kW] 290
Battery type Lead-acid OPzS NiCd Pocket plate Li-ion NCA Flow FeCr
[20,50,80] %DoD Cycle life [7000,2800,1800] [8500,2400,1100] [77500,9800,4800] [20000,20000,20000]
Round trip efficiency [%] 87 92 92 75
O&M [% of CAPEX] 0.5 0.25 0.25 2.5
Capital Cost – DC [USD/kWh] 407 832 826 530
Economic inputs Project life [years] 10 6 18 25
RIR per year [%] 5

Fig. 6. Normalized break-even points for different BESS technologies
between 0.95 and 1.4 for diesel oil, in 0.05 and 0.1 steps, respectively.
Each step is represented by a colored rectangle according to the data
value for that combination of value pairs. Each battery type has its own
scale as shown in the graph legend. In general, the color gradient used
sets the lowest normalized BEP value as dark blue and the highest value
as bright yellow and the median values as light blue, with a corre-
sponding transition (or gradient) between these extremes.
It can be observed that, for the base case, none of the battery types is
economically viable for Energy Time Shift, showing extremely low BEP
values (lower than 0.2).
Indeed, even 40% and 20% increases in the diesel fuel costs and the
electricity tariff, respectively, do not make the installation of any type
of battery viable, having the updated 2018 BESS costs as basis.
Fig. 6 interestingly shows that the lead-acid (OPzS), Li-NCA and
Flow (FeCr) batteries present quite similar BEPs for the entire range of
electricity tariff and the fuel oil analyzed, even with the large difference
in price and life cycles between these technologies. Conversely, the
NiCd batteries show distinctive BEP values. This type of battery pre-
sents the worst BEP, due to its high cost and low number of life cycles
for deep discharges (DoD > 50%), which requires a cost reduction of
about 75% to make it economically attractive. The NiCd battery can
thus be concluded to be inadequate for Energy Time Shift applications.
Nevertheless, it is worth highlighting that this technology is suitable for
other kinds of applications, such as peak shaving and VAR compensa-
tion [3].
Even though the Flow battery presents a relatively low cost and high
number of life cycles, its BEP is not very different from the lead-acid
and Li-NCA batteries. This is due to its high O&M cost and, especially,
its low efficiency. The benefit of the Energy Time Shift is that the
battery can be charged when the electricity tariff is cheaper and it can
be discharged at peak hours, when the tariff is more expensive.
However, because of the flow battery's low efficiency, the energy spent
to charge the battery ends up decreasing the potential profit obtained
from the difference between the on- and off-peak tariffs.
The analysis of Fig. 6 also shows that the BEP is much more sensitive
to the variations in the fuel price than the tariff price, especially for the
diesel fuel values above 1.1 p.u. Additionally, the BEP variation as a
function of the fuel cost is always crescent for all the values analyzed.
The BEP variation as a function of the tariff reaches its peak around
1.15 p.u., decreasing from this point onward.
Of the scenarios analyzed, the one most favorable to the BESS in-
stallation presented 1.4 p.u. and 1.15 p.u. values for diesel fuel and
electricity tariff, respectively. In this scenario, it can be observed that a
31%, 38% and 26% reduction in the costs of lead-acid (OPzS), Li-ion
(NCA) and Flow (FeCr) batteries, respectively, makes the installation of
BESS viable. Considering the current trend in reducing the batteries
prices [4], it can be estimated that in a 5- to 6-year horizon, these three
technologies can become economically attractive to carry out Energy
Time Shift. However, its implementation will still depend on public
policies to change the current market structure and to promote a sus-
tainable development of the technology and ensure a grid-relieving
operation [72,73].
6. Conclusions
This work aimed at presenting a cost-benefit analysis (CBA) of re-
placing DGSs with BESS, in order to implement Energy Time Shift at
peak hours for commercial consumers under ToU tariffs. The CBA was
carried out through the break-even point (BEP) calculation for four
different battery technologies: lead-acid (OPzS), NiCd, Li-NCA and Flow
(FeCr), considering the singularities of each type of battery, the elec-
tricity tariff and DGS operation costs.
A case study was performed, consisting of a commercial consumer
located in the metropolitan region of Campinas, Sao Paulo/Brazil. The
results of the simulations showed that, considering the updated 2018
BESS costs, none of the types of battery analyzed is economically at-
tractive as a replacement for DGS. The NiCd battery performed the
worst, the same that proved to be inadequate for Energy Time Shift
applications.
Of the scenarios analyzed, the most favorable to the BESS installa-
tion presented 1.4 p.u. and 1.15 p.u. values for diesel fuel and elec-
tricity tariff, respectively, regarding the base case. In this scenario, it
can be observed that a 31%, 38% and 26% reduction in the costs of
lead-acid, Li-ion and Flow batteries, respectively, could make the in-
stallation of BESS viable. Considering the current trend in reducing the
battery prices, it was concluded that in a 5- to 6-year horizon, these
three technologies could become economically attractive.
Declaration of Competing Interest
The authors declare that they have no known competing financial
interests or personal relationships that could have appeared to influ-
ence the work reported in this paper.

6
J.R. Martinez-Bolanos, et al. Journal of Energy Storage 29 (2020) 101373

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