Solar PV and Lithium-ion BESS for Commercial Buildings in Sweden : Techno-economic evaluation of Peak Shaving, Energy Arbitrage and Frequency Regulation as management strategies.

Sammanfattning: The residential and commercial sector is the largest consumer of electricity in Sweden and therefore highly affected by fluctuations in electricity price. On the other hand, there is a large potential to reduce both the electricity demand and emissions from electricity generation on a national level if measures are taken within this sector. This Masters' Thesis focuses on the implementation of Solar PV panels and Lithium-ion Battery Energy Storage Systems (Li-BESS) in commercial buildings. The thesis was conducted in collaboration with Vasakronan, one of Sweden’s largest real-estate companies in terms of market share with a lot of focus on sustainability and reducing the electricity demand of their properties. The objective of this study is to determine which one out of three management strategies: Peak Shaving, Energy Arbitrage and Frequency Regulation that generate the highest revenue for a Solar PV + Li-BESS system in Vasakronan’s Lumi Property. A research gap was identified in the literature for a techno-economic model evaluating and comparing these three control strategies, where Peak Shaving and Energy Arbitrage are established, while Frequency Regulation is a new possible control strategy in commercial buildings. The techno-economic model is developed for the three control strategies using the System Advisor Model and Microsoft Excel. The model evaluates battery sizes between 0-600 kWh and uses input data on weather and electricity prices for the years 2018-2022. Quantifiable outputs in terms of Key Performance Indicators (KPIs) from the model are compared between control strategies. Net Present Value (NPV) and Internal Rate of Return (IRR) are the main economic KPIs to determine which control strategy is the most profitable. The result of the analysis showed that the Peak Shaving and Energy Arbitrage controllers does not reach a positive NPV or an IRR above the set discount rate of 6.5 % for any of the battery sizes above 120 kWh for any of the studied datasets. The main reason is that the investment cost for a battery large enough to reduce a sufficient part of the demand or generate enough revenue from the difference in electricity price, is too high. With no battery at all, or a small battery of 120 kWh, the savings in electricity cost from the Solar PV system surpasses the investment and entails a profitable result. The Frequency Regulation controller generated a positive NPV and IRR above the discount rate for all battery sizes between 240 – 600 kWh for all years except 2021, which was the year with the lowest solar radiation. The conclusion from the result for the Frequency Regulation controller is that the revenue gained from a 120-kWh battery is not enough to cover for the investment cost, but for larger batteries the revenue exceeds the investment cost over the whole modelling period. The overall conclusion from is that battery storage with a Li-BESS in commercial buildings coupled with a Solar PV system is only profitable if the battery capacity is offered on the FCR markets. In all other cases, it is preferable to have a solar PV system without battery storage from an economical point of view. However, new markets and potential business models are developing continuously which is something future studies should investigate. A more thorough analysis of the frequency regulation markets and how these will develop over time is required to further validate the result of this thesis.