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Enhancing the economic efficiency of cross-regional renewable energy trading via optimizing pumped hydro storage capacity

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  • Zhang, Xingjin
  • Patelli, Edoardo
  • Zhou, Ye
  • Chen, Diyi
  • Lian, Jijian
  • Xu, Beibei

Abstract

In the context of global energy transition, enhancing the economic efficiency of cross-regional renewable energy trading is essential. This study introduces a strategy to improve trading efficiency by optimizing pumped hydro storage (PHS) capacity. A dynamic pricing model, based on Stackelberg game theory, integrates marginal costs and power delivery patterns to optimize electricity pricing, reduce system fluctuations, and enhance operational efficiency. A multidimensional economic efficiency evaluation framework is developed, encompassing operational efficiency, trading feasibility, sustainability, and investment returns, to assess the impact of PHS across various scenarios. The findings reveal that optimized PHS configurations reduce renewable energy curtailment by over 18 %, increase power delivery reliability to above 95 %, and significantly improve transmission line economics. Specifically, a 2700 MW PHS configuration enhances the return on investment to 8.9 %, boosts the internal rate of return by 2 %, and shortens the payback period by 3 years. Environmentally, PHS improves carbon reduction rates and lowers the marginal cost of carbon reduction by approximately 10 %. The dynamic pricing model further increases investment returns by 4.6 %, 2.2 %, and 1.5 % under the complementary delivery, peak-valley pricing, and net load minimization strategies, respectively. These insights are valuable for optimizing cross-regional electricity transmission and storage systems.

Suggested Citation

  • Zhang, Xingjin & Patelli, Edoardo & Zhou, Ye & Chen, Diyi & Lian, Jijian & Xu, Beibei, 2025. "Enhancing the economic efficiency of cross-regional renewable energy trading via optimizing pumped hydro storage capacity," Renewable Energy, Elsevier, vol. 240(C).
    • Handle: RePEc:eee:renene:v:240:y:2025:i:c:s0960148124022730
    DOI: 10.1016/j.renene.2024.122205
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