Economic viability of battery energy storage and grid strategy: A special case of China electricity market

Boqiang Lin () and Wei Wu ()

Energy, 2017, vol. 124, issue C, 423-434

Abstract: Battery energy storage (BES) plays an important role in the integration of intermittent renewable power and distributed generation. The price arbitrage is a major source of energy storage income. In China, the electricity price is tightly regulated by the government. It's interesting to find out whether the BES is economic viability in such a special electricity market, and what's the optimal response of the grid (or regulator) when facing the arbitrage activities of BES. This research starts with a price arbitrage model to evaluate the feasibility of energy storage in China's electricity market, which can be used to determine the optimal investment scale and operation mode of energy storage. A quantitative assessment is also implemented to discuss the influence when factors change. Following this, an optimal pricing strategy for grid is established. The results reveal that the storage investment can realize positive profit in some districts where the price gap between peak/off-peak periods is high. Appropriate subsidies can be quantitatively described by sensitivity analysis. In terms of social welfare, the energy storage can be deployed on a large-scale at a low social cost under a suitable price mechanism.

Keywords: Battery energy storage; China's power market; Price arbitrage model; Pricing strategy (search for similar items in EconPapers)
Date: 2017
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (31)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0360544217302682
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:energy:v:124:y:2017:i:c:p:423-434

DOI: 10.1016/j.energy.2017.02.086

Access Statistics for this article

Energy is currently edited by Henrik Lund and Mark J. Kaiser

More articles in Energy from Elsevier
Bibliographic data for series maintained by Catherine Liu ().