Energy Storage as a Service: Optimal Pricing for Transmission Congestion Relief

Abstract

This paper focuses on pricing Energy Storage as a Service (ESaaS) for Transmission congestion relief (TCR). We consider a merchant storage facility that competes in an electricity market to trade energy and ancillary services on a day-to-day basis. The facility also has the opportunity to provide a firm TCR service to a regional network operator under a long-term contract. Providing the additional TCR service would impose limitations on the facility's ability to fully harvest daily market trade opportunities. Thus, we model the opportunity costs associated with the TCR service and use it in a hybrid cost-value customized pricing technique to determine the risk-constrained optimal price of ESaaS for TCR. Given the long-term nature of the commitment to provide the TCR service, we use the Conditional Value at Risk (CVaR) metric to mitigate the long-term financial risks faced by the facility. The proposed pricing strategy enables the storage owner to estimate the additional financial gains and the associated risks that would likely result from adding the new service to its operation. Numerical simulations are provided to support the proposed methodology.INDEX TERMS Energy storage as a service (ESaaS), transmission congestion relief, storage as transmission asset (SATA).

Impacts of grid‐scale battery systems on power system operation, case of Baltic region

“…Novel ancillary services from BESS-s include congestion relief [124][125][126][127][128], transmission/distribution system adequacy related services [127,[129][130][131], and power quality-related issues [98,[132][133][134][135][136][137][138]. Authors of Ref.…”

Design of a Battery Energy Management System for Capacity Charge Reduction

“…Compared to other energy storage applications, such as energy arbitrage [10], [11], frequency regulation [12], [13], and transmission congestion relief [14], there are relatively fewer research efforts on optimal dispatch and cost-benefit evaluation for using ESS for capacity charge reduction. A dynamic programming approach is proposed in [15] to model the effect of power system outages on the operation and state of charge of storage in subsequent periods, and thereby to estimate the capacity credit of storage.…”

Software Tools for Energy Storage Valuation and Design

“…Therefore, as the application space for ESSs grows, energy storage valuation is of a particular interest of many energy storage stake holders (e.g., ESS owners, system operators, regulators, and researchers). In the literature, many studies have assessed the potential revenues of ESSs for different applications such as energy arbitrage and frequency regulation in different markets [4][5][6], for enhancing the efficiency of current generation fleet [7], for reducing renewable energy curtailments [8,9], for transmission and distribution (T&D) upgrade deferral and congestion relief [10][11][12], and for BTM applications [13, 14•, 15, 16]. Taking advantages of the knowledge established in the academic literature and the expertise from the field, there are efforts from multiple parties (e.g., national laboratories, utilities, and system integrators) in developing software tools that can be used for valuing energy storage.…”