Private and social benefits of a pumped hydro energy storage with increasing amount of wind power
Santtu Karhinen and
H. Huuki
Energy Economics, 2019, vol. 81, issue C, 942-959
Abstract:
In this paper, we calculate the long-term profitability of a pumped hydro energy storage (PHES) plant that is planned to be built in an old mine. We model the optimal PHES operation for several scenarios with different wind power penetration levels. Our modelling approach first involves estimating wholesale electricity prices for the day-ahead, intraday and balancing market as a function of wind power penetration. The estimated price profiles are implemented in a dynamic programming model, where the PHES plant maximises its balancing market revenue given the optimal commitment in the day-ahead market. We show that increasing the wind penetration changes the optimal PHES operation and increases the PHES profits. Additionally, we quantify how the costs of wind power balancing are affected by the PHES investment. Policy implications are drawn based on the estimated private and social benefits from the investment.
Keywords: Wind power; Energy storage; Dynamic programming; Balancing costs; Pumped hydro (search for similar items in EconPapers)
JEL-codes: C61 Q41 Q42 (search for similar items in EconPapers)
Date: 2019
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Citations: View citations in EconPapers (12)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:eneeco:v:81:y:2019:i:c:p:942-959
DOI: 10.1016/j.eneco.2019.05.024
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