IDEAS home Printed from https://ideas.repec.org/a/eee/eneeco/v85y2020ics0140988319303378.html

Smart energy storage management via information systems design

Author

Listed:
  • He, Qiao-Chu
  • Yang, Yun
  • Bai, Lingquan
  • Zhang, Baosen

Abstract

Enabled by smart meters and Internet of Things (IoTs) technologies, we are now able to harness information systems and automatize the management of energy storages. Motivated by applications such as renewables integration and electrification of transportation, the paradigm shift towards smart-cities naturally inspires information systems design for energy storages. The goal of this paper is to understand the economic value of future market information to increase the efficiency of the energy market. From storages’ perspective, we investigate energy storages’ optimal decentralized buying and selling decisions under market uncertainty. Different potential policy interventions are discussed: (1) providing a publicly available market forecasting channel; (2) encouraging decentralized storages to share their private forecasts with each other; (3) releasing additional market information to a targeted subset of storages exclusively. Through these system level discussions, we evaluate different information management policies to coordinate storages’ actions and improve their profitability. The key findings of this work include (1) a storage's payoff first increases then decreases in its private information precision. The over-precision in forecasts can lead to even lower payoffs; (2) communication among the storages could fail to achieve a coordinated effort to increase market efficiency; (3) it is optimal to release additional information to a subset of energy storages exclusively by targeted information release.

Suggested Citation

  • He, Qiao-Chu & Yang, Yun & Bai, Lingquan & Zhang, Baosen, 2020. "Smart energy storage management via information systems design," Energy Economics, Elsevier, vol. 85(C).
    • Handle: RePEc:eee:eneeco:v:85:y:2020:i:c:s0140988319303378
    DOI: 10.1016/j.eneco.2019.104542
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0140988319303378
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.eneco.2019.104542?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to

    for a different version of it.

    References listed on IDEAS

    as
    1. Benitez, Liliana E. & Benitez, Pablo C. & van Kooten, G. Cornelis, 2008. "The economics of wind power with energy storage," Energy Economics, Elsevier, vol. 30(4), pages 1973-1989, July.
    2. Junjie Zhou & Ying-Ju Chen, 2016. "Targeted Information Release in Social Networks," Operations Research, INFORMS, vol. 64(3), pages 721-735, June.
    3. Osborne, Theresa, 2005. "Imperfect competition in agricultural markets: evidence from Ethiopia," Journal of Development Economics, Elsevier, vol. 76(2), pages 405-428, April.
    4. Lundin, Erik & Tangerås, Thomas P., 2020. "Cournot competition in wholesale electricity markets: The Nordic power exchange, Nord Pool," International Journal of Industrial Organization, Elsevier, vol. 68(C).
    5. Kamalinia, Saeed & Shahidehpour, Mohammad & Wu, Lei, 2014. "Sustainable resource planning in energy markets," Applied Energy, Elsevier, vol. 133(C), pages 112-120.
    6. Severin Borenstein & James Bushnell, 1999. "An Empirical Analysis of the Potential for Market Power in California’s Electricity Industry," Journal of Industrial Economics, Wiley Blackwell, vol. 47(3), pages 285-323, September.
    7. Solomon, A.A. & Kammen, Daniel M. & Callaway, D., 2014. "The role of large-scale energy storage design and dispatch in the power grid: A study of very high grid penetration of variable renewable resources," Applied Energy, Elsevier, vol. 134(C), pages 75-89.
    8. Wang, Xin & Lim, Michael K. & Ouyang, Yanfeng, 2017. "Food-energy-environment trilemma: Policy impacts on farmland use and biofuel industry development," Energy Economics, Elsevier, vol. 67(C), pages 35-48.
    9. repec:aen:journl:2010v31-02-a07 is not listed on IDEAS
    10. repec:aen:journl:2002v23-03-a05 is not listed on IDEAS
    11. Luca Colombo & Gianluca Femminis & Alessandro Pavan, 2014. "Information Acquisition and Welfare," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 81(4), pages 1438-1483.
    12. Sioshansi, Ramteen & Denholm, Paul & Jenkin, Thomas & Weiss, Jurgen, 2009. "Estimating the value of electricity storage in PJM: Arbitrage and some welfare effects," Energy Economics, Elsevier, vol. 31(2), pages 269-277, March.
    13. Yu, Nanpeng & Foggo, Brandon, 2017. "Stochastic valuation of energy storage in wholesale power markets," Energy Economics, Elsevier, vol. 64(C), pages 177-185.
    14. Drabik, Dušan & Ciaian, Pavel & Pokrivčák, Ján, 2016. "The effect of ethanol policies on the vertical price transmission in corn and food markets," Energy Economics, Elsevier, vol. 55(C), pages 189-199.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Karam M. Al-Obaidi & Mohataz Hossain & Nayef A. M. Alduais & Husam S. Al-Duais & Hossein Omrany & Amirhosein Ghaffarianhoseini, 2022. "A Review of Using IoT for Energy Efficient Buildings and Cities: A Built Environment Perspective," Energies, MDPI, vol. 15(16), pages 1-32, August.
    2. Irena Milstein & Asher Tishler & Chi-Keung Woo, 2024. "Carbon-free Electricity Supply in a Cournot Wholesale Market: Israel," The Energy Journal, , vol. 45(2), pages 1-21, March.
    3. Li, Anjie & Qiu, Junjie, 2024. "Does local government debt promote firm green innovation? Evidence from the Chinese local government debt governance reform," Economic Analysis and Policy, Elsevier, vol. 84(C), pages 1046-1062.
    4. Serhii Voitko & Olena Trofymenko, 2021. "Development of methodological foundations for the development of energy in Industry 4.0 in part of game theory and blockchain," Technology audit and production reserves, Socionet;Technology audit and production reserves, vol. 2(4(58)), pages 20-23.
    5. Zhang, Han & Wang, Liang & Lin, Xipeng & Chen, Haisheng, 2022. "Technical and economic analysis of Brayton-cycle-based pumped thermal electricity storage systems with direct and indirect thermal energy storage," Energy, Elsevier, vol. 239(PC).
    6. Milstein, I. & Tishler, A. & Woo, C.K., 2025. "Modeling the effects of photovoltaic technology, battery storage, and electric vehicles on Israel's electricity market from 2030 to 2050," Utilities Policy, Elsevier, vol. 95(C).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Guo, Qiaozhen & He, Qiao-Chu & Chen, Ying-Ju & Huang, Wei, 2021. "Poverty mitigation via solar panel adoption: Smart contracts and targeted subsidy design," Omega, Elsevier, vol. 102(C).
    2. de Sisternes, Fernando J. & Jenkins, Jesse D. & Botterud, Audun, 2016. "The value of energy storage in decarbonizing the electricity sector," Applied Energy, Elsevier, vol. 175(C), pages 368-379.
    3. Schill, Wolf-Peter & Kemfert, Claudia, 2011. "Modeling Strategic Electricity Storage: The Case of Pumped Hydro Storage in Germany," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 32(3), pages 59-87.
    4. Loisel, Rodica & Simon, Corentin, 2021. "Market strategies for large-scale energy storage: Vertical integration versus stand-alone player," Energy Policy, Elsevier, vol. 151(C).
    5. David P. Brown & Andrew Eckert & Douglas Silveira, 2023. "Strategic interaction between wholesale and ancillary service markets," Competition and Regulation in Network Industries, , vol. 24(4), pages 174-198, December.
    6. 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.
    7. Leister, C. Matthew, 2020. "Information acquisition and welfare in network games," Games and Economic Behavior, Elsevier, vol. 122(C), pages 453-475.
    8. Rodica Loisel & Corentin Simon, 2021. "Market strategies for large-scale energy storage: Vertical integration versus stand-alone player," Post-Print hal-04475995, HAL.
    9. Balakin, Sergei & Roger, Guillaume, 2025. "Dynamic trading strategies for storage," Journal of Economic Dynamics and Control, Elsevier, vol. 176(C).
    10. Brown, David P. & Eckert, Andrew & Silveira, Douglas, 2023. "Screening for collusion in wholesale electricity markets: A literature review," Utilities Policy, Elsevier, vol. 85(C).
    11. Lin, Boqiang & Wu, Wei & Bai, Mengqi & Xie, Chunping & Radcliffe, Jonathan, 2026. "Corrigendum to ‘Liquid air energy storage: Price arbitrage operations and sizing optimization in the GB real-time electricity market’ [Energy Economics Volume 78 February 2019 Pages 647–655]," Energy Economics, Elsevier, vol. 157(C).
    12. Antweiler, Werner, 2021. "Microeconomic models of electricity storage: Price Forecasting, arbitrage limits, curtailment insurance, and transmission line utilization," Energy Economics, Elsevier, vol. 101(C).
    13. 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.
    14. Cruise, James R. & Flatley, Lisa & Zachary, Stan, 2018. "Impact of storage competition on energy markets," European Journal of Operational Research, Elsevier, vol. 269(3), pages 998-1012.
    15. Mercier, Thomas & Olivier, Mathieu & De Jaeger, Emmanuel, 2023. "The value of electricity storage arbitrage on day-ahead markets across Europe," Energy Economics, Elsevier, vol. 123(C).
    16. Zafirakis, Dimitrios & Chalvatzis, Konstantinos J. & Baiocchi, Giovanni & Daskalakis, Georgios, 2016. "The value of arbitrage for energy storage: Evidence from European electricity markets," Applied Energy, Elsevier, vol. 184(C), pages 971-986.
    17. Erik Lundin, 2021. "Market Power and Joint Ownership: Evidence from Nuclear Plants in Sweden," Journal of Industrial Economics, Wiley Blackwell, vol. 69(3), pages 485-536, September.
    18. Zhang, Ni & Yan, Yu & Su, Wencong, 2015. "A game-theoretic economic operation of residential distribution system with high participation of distributed electricity prosumers," Applied Energy, Elsevier, vol. 154(C), pages 471-479.
    19. Zakeri, Behnam & Syri, Sanna, 2015. "Electrical energy storage systems: A comparative life cycle cost analysis," Renewable and Sustainable Energy Reviews, Elsevier, vol. 42(C), pages 569-596.
    20. Huang, Qisheng & Xu, Yunjian & Courcoubetis, Costas, 2020. "Stackelberg competition between merchant and regulated storage investment in wholesale electricity markets," Applied Energy, Elsevier, vol. 264(C).

    More about this item

    Keywords

    ;
    ;
    ;
    ;
    ;

    JEL classification:

    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
    • P18 - Political Economy and Comparative Economic Systems - - Capitalist Economies - - - Energy; Environment
    • Q41 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Demand and Supply; Prices
    • Q47 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy Forecasting
    • Q55 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Technological Innovation
    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:eneeco:v:85:y:2020:i:c:s0140988319303378. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/eneco .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.