Optimal electricity cost minimization of a grid-interactive pumped hydro storage using ground water in a dynamic electricity pricing environment

The electricity price arbitrage from the utility grid can be a major source of revenue for energy storage systems. In most countries, the electricity price is tightly regulated by their government statutory authority or energy regulator to which obey the different power utility and distribution companies. It is worthwhile analyzing whether energy storage systems, such as Pumped Hydro Storage systems (PHS) using ground water, are economically viable in such a given electricity market, and determining what the benefits are of optimally operating these systems in arbitrage environments for privately owned PHS primarily used for auto-consumption or self-sufficiency. In this paper, an optimal energy control of an 8 kW grid-interactive Pumped Hydro Storage system using ground water in a farming environment is presented. A typical small farming activity within the Mangaung municipality in Bloemfontein, South Africa, is selected as a case study. The aim is to evaluate the potential energy cost saving, achievable using the proposed system. Therefore, the two objectives are to minimize the cost of energy drawn from the utility, while maximizing the energy injected under the Time-of-Use and Feed-in-Tariff schemes. Thereafter, the performance of the developed model to maximize the proposed PHS economic profitability is analyzed through a case study simulated using Matlab. Simulation results show that a potential of 68.44% energy cost saving can be achieved using the proposed system rather than supplying the load demand by the grid exclusively. From the break-even point analysis conducted, it has been revealed that after 2.25 years corresponding to a cost of $ 7336, the cumulative costs were lower for the proposed system as opposed to the baseline. Furthermore, the payback analysis has shown that the system can be paid off after 5.9 years of operation.