Social Economic Welfare Effects of Large-Scale Energy Storage and Relation with Variable Renewable Energy Sources Shares
Rocha Ojeda, E.
MetadataShow full item record
The widespread integration of Variable Renewable Energy Sources (VRES) into the power system represents a challenge due to their variability and stochasticity. Large-Scale Energy Storage Systems (ESS) are emerging as key technologies to support the VRES integration and the reliability, flexibility, and sustainability of power systems. Understanding the value, revenue streams, and implications of Large-Scale deployment of ESS is important for investors, policy makers, and market regulators to assess their potential role in the current and future power systems as well as to better promote their deployment and integration. The present study aimed to add to the discussion by assessing how large-scale ESS affect the social economic welfare (SEW) in the present and future wholesale electricity markets by studying its effect under different VRES penetration levels. In order to answer the research question, the present study modelled the Belgian Day Ahead (DA) wholesale electricity market-clearing in which the existing Pumped Hydro Electricity Storage (PHES) capacity was simulated next to different sizes of large-scale Battery Energy Storage Systems (BESS) for varying VRES shares. To achieve the previous, a model incorporating multiple merchant-owned large-scale ESS into the DA wholesale electricity market was developed considering two perspectives: the ESS players´ and the Market Operator´s. For the former, the price-maker ESS players´ bidding strategy was modelled as a bilevel optimization with the objective of profit maximization. For the latter, the DA market was cleared in a SEW-maximizing way based on the bids submitted by the generators, consumers and ESS players, obtaining the market-clearing prices and the traded quantity. For each simulated scenario, the SEW, producer surplus, consumer surplus, and ESS Net Revenue were calculated. The difference in the resulting SEW and shifts in consumer and producer surplus were then analysed. The results showed that large-scale ESS can have a significant impact for all market participants of the electricity market in comparison to the no storage case by levelling the differences in the on-peak and off-peak Market Clearing Price (MCP) and avoiding the use of expensive generation. With the increasing VRES participation in the generation mix, ESS systems have the potential of significantly improving the SEW by levelling the extreme maximum and minimum prices caused by the daily cycles of the solar generation. Regarding the effects of the price-maker ESS operation, the research found that the price-maker ESS player’s profit maximizing objective does not always align with the optimal solution from the SEW perspective and can lead to limited use of the storage capacity.