Decision making under uncertainty for deploying battery storage as a non-wire alternative in distribution networks

Abstract

The growing demand for electricity in emerging markets and developing economies (EMDE) is causing loading and congestion problems on distribution networks, particularly in urban locations, that adversely impact sustainable development and economic growth. Electric utilities in these economies face unique constraints regarding raising capital required to upgrade their congested networks. Battery storage has emerged as a non-wire alternative (NWA) to feeder upgrades. This article presents a flexible valuation framework for battery storage use in distribution networks and its application in the context of EMDE distribution network planning. We evaluate the value of storage as an NWA using a multi-stage decision making process that combines system optimization with Markov-decision processes (MDP) to identify the least-cost network upgrade strategy under demand growth uncertainty. This approach was applied to distribution feeders in Delhi, India, and results highlight the cost-effectiveness of battery storage to manage load growth while deferring network investments. Across the low, medium and high battery storage capital cost projections for 2030, we estimate that 18 to 29 GWh of battery storage capacity could be deployed to defer 11,752 to 15,914 km of medium voltage distribution feeder lines that are loaded at 60% or more of their ampere capacity in 2030, resulting in 12 to 16% capital cost savings. Interestingly, lowering storage capital costs does not always lead to increased storage deployment, due to network capacity constraints limiting opportunities for off-peak storage charging.

Keywords

• Battery Storage
• Electric distribution networks
• Investment decisions
• Real options valuation
• Non-wire alternatives