  This paper proposes a convex non-linear cost saving model for optimal
economic dispatch in a microgrid. The mod-el incorporates energy storage
degradation cost and intermittent renewable generation. Cell degradation cost
being a non-linear model, its incorporation in an objective function alters the
convexity of the optimization problem and stochastic algorithms are required
for its solution. This paper builds on the scope for usage of macroscopically
semi-empirical models for degradation cost in economic dispatch problems and
proves that these cost models derived from the existing semi-empirical capacity
fade equations for LiFePO4 cells are convex under some operating condi-tions.
The proposed non-linear model was tested on two data sets of varying size which
portray different trends of seasonality. The results show that the model
reflects the trends of seasonality existing in the data sets and it mini-mizes
the total fuel cost globally when compared to conventional systems of economic
dispatch. The results thus indicate that the model achieves a more accurate
estimate of fuel cost in the system and can be effectively utilized for cost
analysis in power system applications.
