  Lithium-ion battery systems have been used in practical power systems for
peak-shaving, demand response, and frequency regulation. However, a lithium-ion
battery is degrading while cycling and would be scrapped when the capacity
reduces to a certain threshold (e.g. 80%). Such scrapping criterion may not
explore the maximum benefit from the battery storage. In this paper, we propose
a novel scrapping criterion for peak-shaving energy storage based on battery
efficiency, time-of-use price, and arbitrage benefit. A new battery life model
with scrapping parameters is then derived using this criterion. Embedded with
the life model, an optimal operation method for peak-shaving energy storage
system is presented. The results of case study show that the operation method
could maximize the benefits of peak-shaving energy storage while delaying
battery degradation. Compared with the traditional 80% capacity-based scrapping
criterion, our efficiency-based scrapping criterion can significantly improve
the lifetime benefit of the battery.
