Assessment of Energy Storage Operation in Vertically Integrated Utility and Electricity Market

Zora Luburić, Hrvoje Pandžić and Tomislav Plavšić
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Zora Luburić: Faculty of Electrical Engineering and Computing, University of Zagreb, Unska 3, Zagreb 10000, Croatia
Hrvoje Pandžić: Faculty of Electrical Engineering and Computing, University of Zagreb, Unska 3, Zagreb 10000, Croatia
Tomislav Plavšić: Croatian Transmission System Operator Ltd., Kupska 4, Zagreb 10000, Croatia

Energies, 2017, vol. 10, issue 5, 1-16

Abstract: The aim of this paper is to compare the operational pattern of an energy storage system (ESS) in a vertically-integrated utility and in a deregulated market environment for different levels of wind integration. As the main feature of a vertically-integrated utility is a centralized decision-making process, all of the investment and operating decisions are made with a single goal of minimizing the overall system operating costs. As a result, an ESS in such an environment is operated in a way that is optimal for the overall system economics. On the other hand, the system operator in a deregulated market has less power over the system resources, and commitment and dispatch decisions are a result of the market clearing procedure. In this setting, the ESS owner aims at maximizing its profit, which might not be in line with minimizing overall system operating costs or maximizing social welfare. To compare the ESS operation in these two environments, we analyze the storage operation in two different settings. The first one is a standard unit commitment model with the addition of centrally-controlled storage. The second one is a bilevel model, where the upper level is a coordinated ESS profit maximization problem, while the lower level a simulated market clearing. The case study is performed on a standardized IEEE RTS-96 system. The results show a reduction in the generation dispatch cost, online generation capacity and wind curtailment for both models. Moreover, ESS significantly increases social welfare in the market-based environment.

Keywords: energy storage; unit commitment; mixed-integer linear programming; day-ahead electricity market (search for similar items in EconPapers)
JEL-codes: Q Q0 Q4 Q40 Q41 Q42 Q43 Q47 Q48 Q49 (search for similar items in EconPapers)
Date: 2017
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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