Modelling and Economic Evaluation of Energy Management Storage Systems in Offshore Wind Farms Using Lithium Batteries

Abstract

Germany’s rapid expansion of offshore wind energy necessitates solutions to manage production variability and capitalize on market opportunities. This thesis investigates the economic viability of lithium-ion battery energy storage systems (BESS) integrated with offshore wind farms for energy arbitrage in the German day-ahead market (DAM), exploiting price volatility to maximize revenue. A system model evaluates onshore and offshore BESS placement, focusing on BESS-related investment costs, using a case study of wind farm clusters connected to the BorWin2 platform in the German North Sea. An energy management system, employing mixed-integer linear programming and model predictive control, optimizes charging and discharging based on wind power production, weather forecasts, electricity prices, and storage levels, while incorporating realistic battery degradation to balance revenue and longevity. Simulations using historical data from 2021 to 2024 assess a 125 MW BESS with energy capacities ranging from 125 to 625 MWh. The optimal configuration was identified as an onshore 5-hour (625 MWh) storage system under 2023 day-ahead market price levels, which demonstrated marginal economic viability with an internal rate of return of 8.10%. Under a 7% discount rate assumption, this corresponds to a net present value of 11.29 Me and a payback time of 16.8 years, emphasizing the need for patient capital and supportive financing. Offshore configurations were found economically unfeasible due to elevated installation and maintenance costs. Sensitivity analysis indicates that capital expenditure and market price volatility are key drivers, while Germany’s continued renewable expansion may influence electricity prices and, consequently, arbitrage opportunities. Exploring additional revenue streams, such as intraday markets or ancillary services, could further enhance profitability or mitigate risks.