Optimal configuration and operation for user-side energy storage considering lithium-ion battery degradation.

• A two-layer optimization frame to estimate and improve the net profit of BESSs in the whole life cycle. • The semi-empirical degradation model of lithium-ion batteries and economic models of BESSs are embedded into the optimization frame. • The optimization frame applies to different lithium-ion batteries. • The optimal configuration and operation varied from the types of lithium-ion batteries. Battery energy storage systems (BESSs) have been widely employed on the user-side such as buildings, residential communities, and industrial sites due to their scalability, quick response, and design flexibility. However, cell degradation is caused by the charging and discharging of batteries, which reduces the economy of BESSs. For the optimal configuration and operation of BESSs, the battery degradation process should be integrated into the optimal problem by considering the equivalent full cycles over the optimization time horizon. This paper proposes a two-layer optimization frame to estimate and improve the net profit of BESSs in the whole life cycle, the outer layer optimizes the rated capacity and power of BESSs, and the inner layer optimizes the daily operation strategy of BESSs. To this end, the semi-empirical degradation model of lithium-ion batteries and economic models of BESSs are embedded into the optimization frame. Particle swarm optimization (PSO) algorithm and fmincon toolbox of MATLAB are adopted to solve the two-layer frame to maximize the net profit of BESSs. Simulation results of the BESS for a typical industrial user in China demonstrate that the proposed frame can effectively improve the net profit of BESSs. [ABSTRACT FROM AUTHOR]