Comparing the Financial and Environmental Impact of Battery Energy Storage Systems and Diesel Generators on Microgrids

Abstract

This article presents a robust analysis based on the data obtained from a genuine microgrid in operation, simulated by utilizing a diesel generator (DG) in lieu of the Battery Energy Storage System (BESS) to meet the same load during periods of elevated energy costs. The study reveals that the BESS significantly outperforms the DG and the conventional electrical grid in various financial and environmental aspects. Environmentally, BESS accounts for zero CO2 emissions, compared to the 67.32 tons of CO2 emitted annually by the DG. Financially, the total cost of BESS over 20 years (USD 1,553,791.31) is lower than that of DG (USD 1,564,965.18) and the electrical grid (USD 2,726,181.09). Furthermore, BESS displays a lower Required Average Discharge Price—RADP (USD 0.38/kWh) and Required Average Price Spread—RAPS (USD 0.18/kWh) compared to DG (RADP: USD 0.39/kWh; RAPS: USD 0.22/kWh) and the electrical grid (RADP: USD 0.71/kWh; RAPS: USD 0.38/kWh). During periods of high-energy tariffs, BESS provides significant environmental benefits, but it also offers a more economically advantageous option to meet the load. It offers an energy-efficient and economically feasible solution for the operation of microgrids.