A two-stage business model for voltage sag sensitive industrial users employing energy storage systems

Hong Liao, Yunzhu Chen, Zixuan Zheng, Xianyong Xiao and Shu Zhang

Applied Energy, 2025, vol. 379, issue C, No S0306261924023286

Abstract: Integration of a behind-the-meter (BTM) energy storage system (ESS) is a dependable method of reducing electricity costs and improving power quality for industrial users susceptible to voltage sags. However, at present, barriers such as substantial initial investment costs, extended investment return periods, and limited service strategy flexibility are impeding the widespread implementation of BTM ESSs in industrial contexts. Integrated energy service providers (IESPs) supply innovative BTM ESS solutions and have emerged as viable options for navigating these challenges. This study proposes a new two-stage business model designed to advance ESS deployment while considering the needs of both the IESP and users. Herein, the framework of the proposed business model is outlined to delineate the participant roles and responsibilities at different stages. A detailed cost–benefit analysis is conducted to support a scenario analysis based on prospect theory. Then, a Stackelberg game model is constructed to describe the interactive relationship between the participants; using this model, an optimal ESS service strategy can be determined by resolving a simplified Stackelberg game problem. Our findings reveal that this model effectively mitigates long-term income risks for IESPs and substantially lowers initial investment costs for users by 21.93 % to 89.23 %, along with a reduction in lifecycle costs by 2.35 % to 17.12 % for users. A comprehensive analysis of six critical parameters indicates that the ESS lifetime, the disparity between peak and off-peak electricity prices, and power quality management performance exert the most significant influence on the total net benefits for all participants. The proposed model is expected to further the adoption of ESSs among industrial users.

Keywords: Business model; Energy storage system (ESS); Integrated energy service provider (IESP); Prospect theory; Stackelberg game; Voltage sag sensitive industrial user (search for similar items in EconPapers)
Date: 2025
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DOI: 10.1016/j.apenergy.2024.124945

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