LAUSR

Abstract Residential battery energy storage system (BESS) adoption is hindered with its expensive price in current market. Optimally sized BESS can excel the fiscal benefits and thus can be economically sensible. An optimization problem, which targets to minimize the total annual cost including both energy and battery degradation-based costs, is formulated to investigate the added benefits of operational optimization of a BESS over the baseline operation of BESS based on self-consumption maximization (SCM). A case study is conducted considering a Victorian electricity customer in Australia. Results revealed that installation of residential BESSs are fiscally beneficial at current market prices only if adequate rebates are available. A fiscally beneficial upper limit of BESS capacity that can be installed with the prevailing government incentives depending on the PV system capacity is also found. For a given installed cost of BESS (AU$/kWh), optimal BESS capacity is larger when operational optimization of BESS is considered. However, with a time-of-use (TOU) tariff scheme, BESSs based on operational optimization outperforms BESSs based on SCM in terms of the minimum total annual cost, return on investment and PV curtailment avoidance which excels the fiscal benefits of a BESS and results in indirect greenhouse gas emission reduction.