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Valuation framework for large scale electricity storage in a case with wind curtailment

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  • Loisel, Rodica
  • Mercier, Arnaud
  • Gatzen, Christoph
  • Elms, Nick
  • Petric, Hrvoje

Abstract

This paper investigates the value of large scale applications of electricity storage in selected European power systems in the context of wind generation confronted with a grid bottleneck. It analyzes the market value to 2030 of two storage technologies, assuming the market situation projected for Germany and France. The analysis assesses the evolution of storage economics based on the net present value of cash flows. Sensitivities to market and regulatory drivers of value are assessed, e.g. electricity price spreads, ancillary services revenues, wind curtailment and the level of carbon prices. The paper concludes by suggesting possible ways to improve the competitiveness of electricity storage, such as research and development and deployment programmes, and changes to the design of power markets and regulatory arrangements to enable storage owners to better capture the benefits of storage. Such changes would allow electricity storage, where economically viable, to play a critical role in establishing a future sustainable European power system.

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  • Loisel, Rodica & Mercier, Arnaud & Gatzen, Christoph & Elms, Nick & Petric, Hrvoje, 2010. "Valuation framework for large scale electricity storage in a case with wind curtailment," Energy Policy, Elsevier, vol. 38(11), pages 7323-7337, November.
    • Handle: RePEc:eee:enepol:v:38:y:2010:i:11:p:7323-7337
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    11. Haas, J. & Nowak, W. & Palma-Behnke, R., 2019. "Multi-objective planning of energy storage technologies for a fully renewable system: Implications for the main stakeholders in Chile," Energy Policy, Elsevier, vol. 126(C), pages 494-506.
    12. Haas, J. & Cebulla, F. & Cao, K. & Nowak, W. & Palma-Behnke, R. & Rahmann, C. & Mancarella, P., 2017. "Challenges and trends of energy storage expansion planning for flexibility provision in low-carbon power systems – a review," Renewable and Sustainable Energy Reviews, Elsevier, vol. 80(C), pages 603-619.
    13. Krajačić, Goran & Lončar, Dražen & Duić, Neven & Zeljko, Mladen & Lacal Arántegui, Roberto & Loisel, Rodica & Raguzin, Igor, 2013. "Analysis of financial mechanisms in support to new pumped hydropower storage projects in Croatia," Applied Energy, Elsevier, vol. 101(C), pages 161-171.
    14. Blanco, Herib & Faaij, André, 2018. "A review at the role of storage in energy systems with a focus on Power to Gas and long-term storage," Renewable and Sustainable Energy Reviews, Elsevier, vol. 81(P1), pages 1049-1086.
    15. Rodica Loisel & David Shropshire & Christian Thiel & Arnaud Mercier, 2014. "Flexibility assessment in nuclear energy dominated systems with increased wind energy shares," Working Papers hal-00934217, HAL.
    16. Shropshire, David & Purvins, Arturs & Papaioannou, Ioulia & Maschio, Isabella, 2012. "Benefits and cost implications from integrating small flexible nuclear reactors with off-shore wind farms in a virtual power plant," Energy Policy, Elsevier, vol. 46(C), pages 558-573.
    17. Wang, Ge & Zhang, Qi & Mclellan, Benjamin C. & Li, Hailong, 2016. "Multi-region optimal deployment of renewable energy considering different interregional transmission scenarios," Energy, Elsevier, vol. 108(C), pages 108-118.
    18. Loisel, Rodica & Mercier, Arnaud & Gatzen, Christoph & Elms, Nick, 2011. "Market evaluation of hybrid wind-storage power systems in case of balancing responsibilities," Renewable and Sustainable Energy Reviews, Elsevier, vol. 15(9), pages 5003-5012.
    19. Tafarte, Philip & Das, Subhashree & Eichhorn, Marcus & Thrän, Daniela, 2014. "Small adaptations, big impacts: Options for an optimized mix of variable renewable energy sources," Energy, Elsevier, vol. 72(C), pages 80-92.
    20. Kondziella, Hendrik & Bruckner, Thomas, 2016. "Flexibility requirements of renewable energy based electricity systems – a review of research results and methodologies," Renewable and Sustainable Energy Reviews, Elsevier, vol. 53(C), pages 10-22.
    21. Mahdi Takach & Mirza Sarajlić & Dorothee Peters & Michael Kroener & Frank Schuldt & Karsten von Maydell, 2022. "Review of Hydrogen Production Techniques from Water Using Renewable Energy Sources and Its Storage in Salt Caverns," Energies, MDPI, vol. 15(4), pages 1-17, February.
    22. Brendan Cleary, 2015. "Assessing the future economic performance of wind generation in conjunction with compressed air energy storage in the new proposed Irish electricity market," Economics and Business Letters, Oviedo University Press, vol. 4(3), pages 87-97.
    23. Jülch, Verena, 2016. "Comparison of electricity storage options using levelized cost of storage (LCOS) method," Applied Energy, Elsevier, vol. 183(C), pages 1594-1606.
    24. Connolly, D. & Lund, H. & Finn, P. & Mathiesen, B.V. & Leahy, M., 2011. "Practical operation strategies for pumped hydroelectric energy storage (PHES) utilising electricity price arbitrage," Energy Policy, Elsevier, vol. 39(7), pages 4189-4196, July.
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