Impact of strategic behavior and ownership of Energy Storage on provision of flexibility

Abstract

The Strathprints institutional repository (https://strathprints.strath.ac.uk) is a digital archive of University of Strathclyde research outputs. It has been developed to disseminate open access research outputs, expose data about those outputs, and enable the management and persistent access to Strathclyde's intellectual output. Abstract-Energy storage systems (ESS) are expected to provide additional flexibility to managed variable power flows in future power systems. It is believed that the business case for ESS as an alternative to traditional network reinforcements can be improved, if the assets are able to access additional revenue streams by participating in energy and ancillary services markets. To enable this, the storage may need to be operated by private merchants to circumvent the unbundling principle applied in electricity markets today. However, it is not clear if the right incentives are in place for these entities to operate the ESS in a way that provides the required flexibility and supports the wider system benefits sought by the system operator (SO). This work seeks to evaluate the impact of strategic behavior of an independent trader operating ESS in a nodal electricity market. The results indicated that a strategic bidder operating ESS tends to underuse the assets leading to suboptimal solution in terms of market welfare, as well as congestion and curtailment reduction, removing some of the potential benefits the ESS can provide to the power system. Offer price for ESS e at time t β dis te Bid price for ESS e at time t β s tjbBid price block b strategic producer j at t P g tib Output block b producer i at time t P s tjbOutput block b strategic producer j at time t P Ebid te , P Eoffer teEnergy bid and offer of ESS e at time t P

Investigating the impacts of price‐taking and price‐making energy storage in electricity markets through an equilibrium programming model

“…A large number of previous papers [14][15][16][17][18][19][20][21][22][23][24][25][26][27][28][29][30] have modelled price-making ESSs and quantitatively analysed their ability to exercise market power. However, the modelling approaches adopted in these works exhibit certain limitations.…”

“…However, the parameters of this function are determined through exogenous data and therefore cannot accurately capture the impacts of other market participants' characteristics on price formation. To address this limitation, the authors of [21][22][23][24][25][26][27][28][29][30] model the decision making of a single price-maker ESS through bi-level optimisation approaches, which endogenously represent the market clearing and price formation process. Nevertheless, all these papers assume that only the single examined ESS acts strategically and electricity producers are price-takers (i.e.…”

“…• A multi-period equilibrium programming electricity market model is developed, capturing the time-coupling operational characteristics of ESSs as well as network constraints. In contrast to single bi-level/MPEC models employed in [13,[21][22][23][24][25][26][27][28][29][30] and representing an unrealistic monopoly setting, the proposed model captures more accurately the reality, where the market outcome is determined by the interactions of multiple independent and strategic electricity producers and ESSs. • Quantitative analysis with the developed model demonstrates that the price-taking ESSs mitigate market power exercise by strategic producers during peak periods and enhance it during off-peak periods, with the former mitigation significantly dominating the latter enhancement and resulting in an overall positive impact in terms of market efficiency.…”

“…Adopting the approach of [21][22][23][24][25][26][27][28][29][30][31][32][33][34][35][36][37], the decision-making process of each strategic producer or ESS is modelled through a bi-level optimisation problem, the structure of which is illustrated in Fig. 1.…”

Advanced bidding strategy for participation of energy storage systems in joint energy and flexible ramping product market

“…Research efforts on efficient technologies and mechanisms to improve system flexibility have seen a tremendous growth in recent years. Among different technologies, energy storage systems (ESSs) bring about potentials for significant operational flexibility and have been realised as an effective solution to overcome the intermittency concerns of renewable generations [6, 7]. Among the prominent advantages of such technologies in modern power systems, one can highlight the ESS ability to smoothen the energy market prices, defer transmission line expansion decisions, enhance the system reliability and resilience and so on [8, 9].…”