Life-Cycle Co-Optimization of User-Side Energy Storage Systems with Multi-Service Stacking and Degradation-Aware Dispatch

The integration of a user-side energy storage system (ESS) faces notable economic challenges, including high upfront investment, uncertainty in quantifying battery degradation, and fragmented ancillary service revenue streams, which hinder large-scale deployment. Conventional configuration studies often handle capacity planning and operational scheduling at different stages, complicating consistent life-cycle valuation under degradation and multi-service participation. This paper proposes a life-cycle multi-service co-optimization model (LC-MSCOM) to jointly determine ESS power–energy ratings and operating strategies. A unified revenue framework quantifies stacked revenues from time-of-use arbitrage, demand charge management, demand response, and renewable energy accommodation, while depth of discharge (DoD)-related lifetime loss is converted into an equivalent degradation cost and embedded in the optimization. The model is validated on a modified IEEE benchmark system using real generation and load data. Results show that LC-MSCOM increases net present value (NPV) by 26.8% and reduces discounted payback period (DPP) by 12.7% relative to conventional benchmarks, and sensitivity analyses confirm robustness under discount-rate, inflation-rate, and tariff uncertainties. By coordinating ESS dispatch with distribution network operating limits (nodal power balance, voltage bounds, and branch ampacity constraints), the framework provides practical, investment-oriented decision support for user-side ESS deployment.