An Optimal Investment Model for Battery Energy Storage Systems in Isolated Microgrids

In remote microgrids, the integration of renewable energy sources (RES) is essential to meet the demand in conjunction with the dispatchable fuel-based generation units. The need to facilitate RES efficiently and the very high cost of fuel transportation in these areas make installing battery energy storage system (BESS) an appealing solution. However, the high cost of BESS requires optimizing the BESS technology selection and size to increase their benefits to the microgrid. In this paper, the optimal BESS installation decisions are determined from the perspective of an investor with the objective of profit maximization. The maximum size of BESS that the investor is willing to install for a certain discharge price is determined for various BESS technologies. Also, a new approach to determine theminimum acceptable discharge price at which the installation would make profit for the investor is proposed. Thereafter, the optimal microgrid and BESS operation is determined to minimize the total microgrid costs while meeting its growing demand considering the installation decisions obtained from the proposed investment model.