Impact of Cell Chemistry on the Degradation and Revenue Potential of Energy Storage Systems

Battery energy storage systems (BESS) are widely deployed in power grids for their revenue potential, rapid response capabilities, and support for energy shifting. However, their long-term performance and economic returns are strongly influenced by degradation, which depends on both cell chemistry and market participation strategies. This study examines the market revenue potential of BESS, focusing on degradation across different Lithium-ion cathode chemistries. Stress-factor-based degradation models are formulated for lithium iron phosphate (LFP), lithium nickel manganese cobalt oxide (NMC), lithium nickel cobalt aluminum oxide (NCA) chemistries and validated using real-world cell cycling data. BESS revenues are then evaluated for various market participation strategies (energy arbitrage, frequency regulation, and operational reserves), assessing the economic impacts of chemistry-driven cell degradation. Additionally, this study also identifies the most economically suitable market applications for each cell chemistry.