How Time-of-Use Tariffs and Storage Costs Shape Optimal Hybrid Storage Portfolio in Buildings

Time-of-Use (TOU) tariffs are a primary driver for deploying demand-side energy storage, yet their specific structural characteristics, such as peak-to-valley ratios, and the presence of critical-peak pricing, can significantly influence the economic viability of hybrid storage systems. In addition, the continuous decrease in storage capacity costs also constitutes a major influencing factor on storage investment portfolios. This study investigates the sensitivity of optimal hybrid storage portfolios to varying TOU tariffs and storage costs. We develop a multi-scenario optimization framework that models diverse, realistic TOU tariff structures and evaluates their impact on the life cycle economic performance of hybrid storage in a representative office building. The methodology leverages a refined daily operation optimization model that accounts for storage degradation and system efficiencies, applied across a set of typical operational days. The impacts of specific tariff parameters (e.g., peak-to-valley ratio, critical-peak pricing) and storage costs on the optimal allocation of investment between battery and cooling storage are investigated. The thresholds of tariff and capacity cost that trigger a shift in investment preference are identified. The findings provide actionable insights for policymakers on designing effective dynamic tariffs to incentivize specific storage technologies and for building owners formulating future-resilient storage investment strategies.