Meeting ambitious goals of transition to distributed and environmentally-friendly renewable energy generation can be difficult to achieve without energy storage systems due to technical and economical challenges. Moreover, energy storage systems have a high potential of not only smoothing and improving the predictability of the intermittent renewables but also of providing the ancillary services in the future energy markets. However, this is currently difficult to achieve due to high prices of the energy storage systems and difficulties with accurate prediction of the energy storage systems lifetime, which introduces significant risk into the business model. This paper deals with the investigation of the lifetime of LiFePO4/C battery systems when they are used to provide primary frequency regulation service. A semi-empirical lifetime model for these battery cells was developed based on the results obtained from accelerated lifetime testing. The developed Li-ion battery lifetime model is later a base for the analyses of the economic profitability of the investment in the Li-ion battery energy storage system (BESS), which delivers the primary frequency regulation service on the Danish electricity market. Moreover, in this paper a possible improvement of the Li-ion BESS energy management strategy is shown, which allows for obtaining the higher NPV.