Distribution level battery storage valuation framework

The growing demand for electricity in emerging markets and developing economies such as India is causing loading and congestion problems on distribution networks, particularly in urban locations. Electric utilities in these regions face unique constraints regarding raising capital required to upgrade their congested networks. Battery storage has emerged as a non-wire alternative to feeder-level upgrades. This article presents a valuation framework by optimally sizing and placing battery storage on the distribution network. We evaluate the value of storage using a real options analysis through a Markov Chain Monte Carlo to identify the least-cost network upgrade strategy, given demand growth uncertainty. When applied to urban distribution network feeders typical of those found in congested cities in India, the approach highlights the economic value of network investment deferrals by making use of battery storage. We find that storage costs below 261 USD/kWh justify investments in distribution level storage and storage as a non-wire alternative only makes sense on moderately loaded feeders where storage charging is still feasible without violating network thermal capacity limits.