An Economic Analysis of Load Leveling with Battery Energy Storage Systems (BESS) in an Electricity Market Environment: The Korean Case

Hyung Tae Kim, Young Gyu Jin and Yong Tae Yoon
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Hyung Tae Kim: Department of Electrical and Computer Engineering, Seoul National University, 1 Gwanak-ro, Gwanak-gu, Seoul 08826, Korea
Young Gyu Jin: Department of Electrical Engineering, Jeju National University, 102 Jejudaehak-ro, Jeju-si, Jeju 63243, Korea
Yong Tae Yoon: Department of Electrical and Computer Engineering, Seoul National University, 1 Gwanak-ro, Gwanak-gu, Seoul 08826, Korea

Energies, 2019, vol. 12, issue 9, 1-16

Abstract: The capacity of battery energy storage systems (BESS) is expected to increase for power system applications. However, as the cost of BESS is high, economic feasibility must be considered when using BESS in grid applications. Load leveling with BESS is one such application for which the economic implications have been analyzed in the literature. However, these studies do not sufficiently consider the fact that the leveled loads will lead to a change in electricity prices, thereby modifying charging/discharging operations of BESS. Additionally, in a competitive electricity market, electricity prices are not determined by the generator cost functions. Market participants’ strategic decisions also affect prices. Therefore, we conducted an economic analysis of load leveling with BESS in an electricity market from the perspective of a utility company and/or a government agency. In our analysis of the Korean market, we examine whether the leveled loads necessarily lead to economic benefits. Load leveling performance and the associated economic benefit are quantitatively analyzed for varying sizes of BESS. Further, the policy implications related to using BESS are derived from the analysis results.

Keywords: battery energy storage systems (BESS); economic analysis; load leveling; 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: 2019
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (6)

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