Alternate Framing: Predictive Control and Economic Assessment of Grid-Forming BESS for Flexibility Provision

Energy Storage Systems (BESS) using an hourly co-simulation framework that captures operational flexibility, degradation dynamics, and long-term financial performance. The proposed model jointly represents State of Charge (SOC), State of Health (SOH), stochastic availability, and economic indicators such as Net Present Value (NPV) and Return on

Investment (ROI) over a multi-year horizon. Two BESS designs with identical power and energy ratings but different Round-Trip Efficiency (RTE) are evaluated under identical price scenarios, operational constraints, and ageing assumptions. Operational flexibility is exploited through energy arbitrage in an energy-only market setting. Two dispatch strategies are compared: a rule-based heuristic relying on fixed price thresholds and an optimal Mixed-Integer

Linear Programming (MILP) formulation that maximizes arbitrage profit while enforcing SOC dynamics, power limits, availability constraints, and non-simultaneous charging and discharging. The MILP dispatch enhances temporal flexibility by dynamically selecting charging and discharging periods with higher expected price spreads, resulting in higher energy throughput and arbitrage revenues than the heuristic approach, while amplifying the economic value of efficiency improvements. However, enhanced flexibility accelerates degradation, increasing equivalent cycles and reducing average SOH, thereby revealing a trade-off between operational value and asset lifetime. Although all cases reach the same end-of-life SOH constraint, degradation trajectories differ across dispatch strategies. Break-even analyses quantify the CAPEX and efficiency premiums sustainable under optimal dispatch. Overall, the proposed degradation-aware framework shows that flexibility creates economic value through optimal temporal arbitrage and increased throughput, while imposing degradation costs that must be explicitly considered for robust investment decisions and long-term BESS viability.