Economic Value of Li-ion Energy Storage System in Frequency Regulation Application from Utility Firm’s Perspective in Korea

Abstract

Energy Storage Systems (ESSs) have recently been highlighted because of their many benefits such as load-shifting, frequency regulation, price arbitrage, renewables, and so on. Among those benefits, we aim at evaluating their economic value in frequency regulation application. However, unlike previous literature focusing on profits obtained from participating in the ancillary service market, our approach concentrates on the cost reduction from the perspective of a utility firm that has an obligation to pay energy fees to a power exchange. More specifically, we focus on the payments between the power exchange market and the utility firm as a major source of economic benefits. The evaluation is done by costbenefit analysis (CBA) with a dataset of the Korean market while considering operational constraint costs as well as scheduled energy payments, and a simulation algorithm for the evaluation is provided. Our results show the potential for huge profits to be made by cost reduction. We believe that this research can provide a guideline for a utility firm considering investing in ESSs for frequency regulation application as a source of cost reduction. OPEN ACCESSEnergies 2015, 8 5001

Utilization of Energy Storage System for Frequency Regulation in Large-Scale Transmission System

“…The demonstration project of the FR-ESS is in progress in real power systems in many countries [18]. In Korea, the ESS for FR applications is currently installed at about 376 MW capacity, as shown in Figure 7, and demonstrating its effectiveness in several contingency situations and capacity expansion is under review [25]. In this study, we assumed that the total capacity as 1 GW to study the effect of large scale ESS on the power system.…”

Implementation of Optimal Scheduling Algorithm for Multi-Functional Battery Energy Storage System

“…In the case of KEPCO (Korea Electric Power Corporation), research focusing on frequency regulation rather than arbitrage and operation in the position of MG or the owner was performed. In the case of KEPCO, the institutional basis for the ESS to be used in the electric power market has not been established yet [9]. Therefore, research on frequency coordination services and renewable energy linkage is active from the point of view of system operation rather than part of operation of individual operators [5].…”

Assessing the Benefits of Battery Energy Storage Systems for Frequency Regulation, Based on Electricity Market Price Forecasting

“…In determining benefits, an economic assessment should precede ESS installation. Hur et al [17] propose economic analysis when an ESS is introduced as an F/R resource in an electricity market. Some studies discuss, from a utility perspective, economic benefit analyses in accordance with price arbitrage as a result of ESS application [18][19][20].…”