Energy Storage Investment and Operation in Efficient Electric Power Systems

Abstract

We consider welfare-optimal investment in and operation of electric power systems with constant returns to scale in multiple available generation and storage technologies under perfect foresight.We extend a number of classic results on generation, derive conditions for investment and operations of storage technologies described by seven cost/performance parameters, and develop insights on power systems with multiple storage technologies. Simulation of a deeply decarbonized "Texas-like" power system with two available storage technologies shows both the non-existence of simple "merit-order" rules for storage operation and the value of frequency domain analysis to describe efficient operation. Our analysis points to the critical role of the capital cost of energy storage capacity in influencing efficient storage operation.

Prospects of electricity storage

“…Trends in the spreading of stationary batteries in the USA [61] show that the profitability of ESS depends on the revenues, which is an indication for the stakeholders to ensure compensation for storage costs. Hence, technology with the lowest initial costs would be the optimal solution, but sometimes technology such as Li-ion battery, with higher investment costs, can be an optimal solution if that technology has some other advantages, such as high round trip efficiency and lower charge/discharge capacity costs in comparison to Hydrogen [62].…”

Competitive Energy Storage and the Duck Curve

“…This simple description of storage costs is reasonable for battery storage of a few hours duration with negligible self-discharge and negligible variable operating and maintenance costs. In the most general case, seven parameters are necessary to describe storage costs, even under constant returns to scale (Junge et al, 2021).…”

“…This amounts to assuming that energy storage capacity is effectively infinite, since low-price and high-price periods may be far apart in time. Other authors, including Crampes and Trochet (2019), Brown and Reichenberg (2020) and Junge et al (2021) have introduced time explicitly but assumed perfect foresight. While these models yield a number of general results regarding investment in and operation of storage facilities under competition, the perfect foresight assumption is strong and eliminates the precautionary demand for storage.…”

Wastewater Reuse to Mitigate the Risk of Water Shortages: An Integrated Investment Appraisal

“…The approach to mitigating electricity outages in the electricity sector has valuable lessons for countries seeking to manage the risk of water shortages. To meet consumers' instantaneous demand for electricity, the electric utility must invest in the generation capacity of technologies that can quickly respond to close any gap between the amount of electricity demanded and the current supply [1,2]. The demand for electricity by consumers and the supply of electricity generated may fluctuate daily and seasonally.…”