On the marginal value of electricity storage

Bitar, Eilyan; Khargonekar, Pramod; Poolla, Kameshwar

doi:10.1016/j.sysconle.2018.09.007

Title: On the marginal value of electricity storage

Journal Article · Mon Dec 17 00:00:00 EST 2018 · Systems & Control Letters

DOI:https://doi.org/10.1016/j.sysconle.2018.09.007· OSTI ID:1571135

Bitar, Eilyan ^[1]; Khargonekar, Pramod ^[2]; Poolla, Kameshwar ^[3]

Cornell Univ., Ithaca, NY (United States). School of Electrical and Computer Engineering
Univ. of California, Irvine, CA (United States). Dept. of Electrical Engineering and Computer Science
Univ. of California, Berkeley, CA (United States). Dept. of Electrical Engineering and Computer Science

We investigate the problem of characterizing the economic value of energy storage capacity to a wind power producer (WPP) that sells its energy in a conventional two-settlement electricity market. The WPP can offer a forward contract to supply power in the day-ahead market, subject to financial penalties for imbalances between the contracted power and the power that is delivered in real-time. We consider the setting in which the WPP has access to a co-located energy storage system, and can thus reshape its wind power production subject to its storage capacity constraints. Modeling wind power as a random process, we show that the problem of determining optimal forward contract offerings—given recourse with storage—is convex. We further establish that the maximum expected profit is concave and non-decreasing in the energy storage capacity, which reveals that the greatest marginal benefit from energy storage is derived from initial investment in small storage capacity. We provide a characterization of the marginal value of small energy storage capacity to the WPP. The formulae we derive shed light on the relationship between the value of storage and certain statistical measures of variability in the underlying wind power process.

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Research Organization:: Lawrence Berkeley National Laboratory (LBNL), Berkeley, CA (United States)

Sponsoring Organization:: USDOE Office of Science (SC)

Grant/Contract Number:: AC02-05CH11231

OSTI ID:: 1571135

Journal Information:: Systems & Control Letters, Vol. 123, Issue C; ISSN 0167-6911

Publisher:: ElsevierCopyright Statement

Country of Publication:: United States

Language:: English

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Cited by: 6 works

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Cited By (3)

Design of Incentive Mechanisms Using Prospect Theory to Promote Better Sell-back Behavior among Prosumers Sen, Diptangshu; Ghosh, Arnob arXiv https://doi.org/10.48550/arxiv.2011.10068	text	January 2020
Value of Storage for Renewable Portfolio Standard Zhang, Jiasheng; Gu, Nan; Yu, Yang 2020 IEEE Power & Energy Society General Meeting (PESGM) https://doi.org/10.1109/pesgm41954.2020.9281826	conference	August 2020
The Sharing Economy for the Smart Grid Kalathil, Dileep; Wu, Chenye; Poolla, Kameshwar arXiv https://doi.org/10.48550/arxiv.1608.06990	preprint	January 2016

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