There is no exactly real method to compute depreciation, all methods that can be use by accountants have percentage of estimation.

There is no exactly real method to compute depreciation, all methods that can be use by accountants have percentage of estimation.

Depreciation is an accounting term and doesn't necessarily have much to do with degradation. Which do you mean? Depreciation is a proportion of the purchase cost of an object which you are allowed to claim against tax. Degradation is the proportion of initial capacity that the battery loses per (usually) year.

Tony Maine is correct. You will need to clarify as to whether you are seeking to estimate the useful life of the battery or the number of accounting periods that you wish to distribute the cost of the battery over. They are kind of the same - but different. Apportioning cost is not quite the same as wanting to know how much the battery actually deteriorates, and to what extent, over time. Do you want to know the useful life of the battery?

Dear all

Thanks for your suggestion,

As you know, the participation of electric vehicles in the V2G mode increases the number of charging and discharging and therefore decreases the battery nominal life. So EV owners are impressed a cost.

The EV battery systems have a cycle life, defined as the number of complete charge-discharge cycles that the battery can perform before its nominal capacity falls below 80% of its initial rated capacity. Many factors contribute to the cycle life of an EV battery. Among these factors, the depth of discharge (DOD), and ambient temperature are the most important factors. It is important to note that the newest EV has a temperature management system that keeps the battery temperature within a specified range that is suitable for its operation. So the main factor for cycle life is DOD.

In some paper for battery degradation cost in $/kWh term, an equation is presented. (see ref. (1)). According to the date of publication, this amount is old enough. Given the ever-increasing advances in electric vehicle batteries, this amount definitely varies. Also, based on some previous paper e.g. ref (2) (see equation (5)), I use the battery depreciation cost term in my recent paper i.e. ref (3). (see equation (17)).

[1] Kempton, W., & Tomić, J. (2005). Vehicle-to-grid power fundamentals: Calculating capacity and net revenue. Journal of power sources, 144(1), 268-279.

[2] Neyestani, N., Damavandi, M. Y., Shafie-Khah, M., Contreras, J., & Catalão, J. P. (2014). Allocation of plug-in vehicles' parking lots in distribution systems considering network-constrained objectives. IEEE Transactions on Power Systems, 30(5), 2643-2656.

[3] Sadati, S. M. B., Moshtagh, J., Shafie-khah, M., & Catalão, J. P. (2018). Smart distribution system operational scheduling considering electric vehicle parking lot and demand response programs. Electric Power Systems Research, 160, 404-418.

Best

Sadati

@Tony Maine, I think Sadati is looking for an estimate of the actual life expectancy of a battery based on charging/discharging cycles. He then wants to quantify that life expectancy in terms of $/kWh. It is not a depreciation approach in accounting terms but rather one in engineering terms - though accountants could use it.

Generally accountants simply distribute cost over several accounting periods based on the estimated effective life expectancy of the asset. Depreciation for taxation purposes can be quite different as there are all sorts of discounts and incentives that can influence that calculation.

A key problem with this prediction is that the replacement cost of the battery may be quite different when time comes to actually replace the asset. Might I suggest this could only be done by estimating the number of cycles that the battery could reasonably be expected to survive and to multiply that number by the capacity of the battery? A cost per kWh could then be assigned to that overall discharge.

In practice it will not be much more than a 'best guess' as there are limitless influencing factors which will determine the actual life of the cells.

Does that help?