Economic analysis of industrial energy storage systems in Brazil: A stochastic optimization approach

This paper proposes a methodology for stochastic economic analysis/optimization of industrial battery energy storage systems in Brazil or other regions with a similar tariff structure. The proposed methodology is highly robust/accurate due to the consideration of several risks associated with the investment. Moreover, the subject is addressed as a stochastic optimization problem rather than a simple economic analysis since five design variables inherently influence the economic feasibility of industrial battery energy storage systems. The system's sizing, the contracted load demands in the off-peak/peak periods, and charge/discharge specifications must be optimally defined when executing the project, which is not a trivial task. Therefore, the proposed methodology is expected to be valuable in increasing the deployment of battery energy storage systems, providing a novel perspective of their economic feasibility. Furthermore, the method is applied to an industry located south of MG - Brazil, where a photovoltaic distributed generation system is already available. Finally, results demonstrate that the energy storage project is highly feasible, as a mean net present value of R$1,158,018 (US$218,494) and a mean return on investment of 56.7% with controlled risk were accomplished when optimizing the design variables. A literature review demonstrated that this paper is a pioneer in demonstrating such a high level of economic feasibility for industrial battery energy storage systems in Brazil. One year of primary data from the industry (historical load demand series) is made available through a GitHub repository so that results can be replicated.(c) 2022 Elsevier Ltd. All rights reserved.