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The impact of electricity storage on wholesale electricity prices

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  • Nyamdash, Batsaikhan
  • Denny, Eleanor

Abstract

This paper analyzes the impact of electricity storage on the production cost of a power system and the marginal cost of electricity (electricity price) using a unit commitment model. Also real world data has been analyzed to verify the e®ect of storage operation on the electricity price using econometric techniques. The unit commitment model found that the deployment of a storage system reduces the fuel cost of the power system but increases the average electricity price through its e®ect on the power system operation. However, the reduction in the production cost was found to be less than the increase in the consumer's cost of electricity resulting in a net increase in costs due to storage. Di®erent storage and CO2 price scenarios were investigated to study the sensitivity of these results. The regression analysis supports the unit commitment results and ¯nds that the presence of storage increases average wholesale electricity prices for the case study system.

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Bibliographic Info

Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 34941.

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Date of creation: 08 Oct 2011
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Handle: RePEc:pra:mprapa:34941

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Keywords: Electricity storage; Electricity price; Production cost;

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  1. Ramteen Sioshansi, 2010. "Welfare Impacts of Electricity Storage and the Implications of Ownership Structure," The Energy Journal, International Association for Energy Economics, vol. 0(Number 2), pages 173-198.
  2. Pablo Benitez & Lilianna Dragulescu & G. Cornelis van Kooten, 2006. "The Economics of Wind Power with Energy Storage," Working Papers 2006-02, University of Victoria, Department of Economics, Resource Economics and Policy Analysis Research Group.
  3. Ramteen Sioshansi, 2011. "Increasing the Value of Wind with Energy Storage," The Energy Journal, International Association for Energy Economics, vol. 0(Number 2), pages 1-30.
  4. Tuohy, Aidan & Meibom, Peter & Denny, Eleanor & O'Malley, Mark, 2009. "Unit commitment for systems with significant wind penetration," MPRA Paper 34849, University Library of Munich, Germany.
  5. Crampes, Claude & Moreaux, Michel, 2010. "Pumped storage and cost saving," Energy Economics, Elsevier, vol. 32(2), pages 325-333, March.
  6. Tuohy, A. & O'Malley, M., 2011. "Pumped storage in systems with very high wind penetration," Energy Policy, Elsevier, vol. 39(4), pages 1965-1974, April.
  7. Zafirakis, D. & Kaldellis, J.K., 2009. "Economic evaluation of the dual mode CAES solution for increased wind energy contribution in autonomous island networks," Energy Policy, Elsevier, vol. 37(5), pages 1958-1969, May.
  8. Troy, Niamh & Denny, Eleanor & O'Malley, Mark, 2010. "Base-load cycling on a system with significant wind penetration," MPRA Paper 34848, University Library of Munich, Germany.
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