A Market Feedback Framework for Improved Estimates of the Arbitrage Value of Energy Storage Using Price-Taker Models

Emmanuel, Michael Ikechi; Denholm, Paul

doi:10.1016/j.apenergy.2021.118250

A Market Feedback Framework for Improved Estimates of the Arbitrage Value of Energy Storage Using Price-Taker Models

Journal Article · Mon Jan 31 23:00:00 EST 2022 · Applied Energy

DOI:https://doi.org/10.1016/j.apenergy.2021.118250· OSTI ID:1845688

Emmanuel, Michael Ikechi;

Price-taker (PT) models are often used to assess the potential value or revenue of energy arbitrage opportunities for energy storage in wholesale markets. But as greater amounts of energy storage are deployed on the grid, current PT models fail to predict the effects that energy storage itself can have on market prices. This can lead to an overestimation of the economic value of storage and an inability to capture price suppression. In this paper, we propose the use of a modified PT model to simulate the impact of increased storage deployment on energy prices and the resulting impact on revenue. Our method uses a gradient-boosting regressor to estimate the impact on prices, and we apply our method on historical price data from the PJM and California Independent System Operator wholesale markets. We use this approach to explore possible causes of electricity price suppression that occur from storage capacity additions, which is generally not possible with PT models.

Research Organization:: National Renewable Energy Laboratory (NREL), Golden, CO (United States)

Sponsoring Organization:: USDOE Office of Energy Efficiency and Renewable Energy (EERE), Solar Energy Technologies Office (EE-4S)

DOE Contract Number:: AC36-08GO28308

OSTI ID:: 1845688

Report Number(s):: NREL/JA-5D00-79184; MainId:33410; UUID:9c9f8002-66fc-41a6-b609-29d808df624a; MainAdminID:63855

Journal Information:: Applied Energy, Journal Name: Applied Energy Vol. 310

Country of Publication:: United States

Language:: English

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ENERGY PLANNING, POLICY, AND ECONOMY,ENERGY STORAGE
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A Market Feedback Framework for Improved Estimates of the Arbitrage Value of Energy Storage Using Price-Taker Models

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