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Assessment of Energy Storage Operation in Vertically Integrated Utility and Electricity Market

Author

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  • Zora Luburić

    (Faculty of Electrical Engineering and Computing, University of Zagreb, Unska 3, Zagreb 10000, Croatia)

  • Hrvoje Pandžić

    (Faculty of Electrical Engineering and Computing, University of Zagreb, Unska 3, Zagreb 10000, Croatia)

  • Tomislav Plavšić

    (Croatian Transmission System Operator Ltd., Kupska 4, Zagreb 10000, Croatia
    This paper is an extended version of our paper published in Luburić, Z.; Pandžić, H.; Plavšić, T. Comparison of Energy Storage Operation in Vertically Integrated and Market-Based Power System. In Proceedings of the IEEE International Conference on Environment and Electrical Engineering 2016, Florence, Italy, 7–10 June 2016.)

Abstract

The aim of this paper is to compare the operational pattern of an energy storage system (ESS) in a vertically-integrated utility and in a deregulated market environment for different levels of wind integration. As the main feature of a vertically-integrated utility is a centralized decision-making process, all of the investment and operating decisions are made with a single goal of minimizing the overall system operating costs. As a result, an ESS in such an environment is operated in a way that is optimal for the overall system economics. On the other hand, the system operator in a deregulated market has less power over the system resources, and commitment and dispatch decisions are a result of the market clearing procedure. In this setting, the ESS owner aims at maximizing its profit, which might not be in line with minimizing overall system operating costs or maximizing social welfare. To compare the ESS operation in these two environments, we analyze the storage operation in two different settings. The first one is a standard unit commitment model with the addition of centrally-controlled storage. The second one is a bilevel model, where the upper level is a coordinated ESS profit maximization problem, while the lower level a simulated market clearing. The case study is performed on a standardized IEEE RTS-96 system. The results show a reduction in the generation dispatch cost, online generation capacity and wind curtailment for both models. Moreover, ESS significantly increases social welfare in the market-based environment.

Suggested Citation

  • Zora Luburić & Hrvoje Pandžić & Tomislav Plavšić, 2017. "Assessment of Energy Storage Operation in Vertically Integrated Utility and Electricity Market," Energies, MDPI, vol. 10(5), pages 1-16, May.
    • Handle: RePEc:gam:jeners:v:10:y:2017:i:5:p:683-:d:98533
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    References listed on IDEAS

    as
    1. Anthony Papavasiliou & Shmuel S. Oren, 2013. "Multiarea Stochastic Unit Commitment for High Wind Penetration in a Transmission Constrained Network," Operations Research, INFORMS, vol. 61(3), pages 578-592, June.
    2. Pilar Meneses de Quevedo & Javier Contreras, 2016. "Optimal Placement of Energy Storage and Wind Power under Uncertainty," Energies, MDPI, vol. 9(7), pages 1-18, July.
    3. Ramteen Sioshansi & Paul Denholm & Thomas Jenkin, 2012. "Market and Policy Barriers to Deployment of Energy Storage," Economics of Energy & Environmental Policy, International Association for Energy Economics, vol. 0(Number 2).
    4. Kyriakopoulos, Grigorios L. & Arabatzis, Garyfallos, 2016. "Electrical energy storage systems in electricity generation: Energy policies, innovative technologies, and regulatory regimes," Renewable and Sustainable Energy Reviews, Elsevier, vol. 56(C), pages 1044-1067.
    5. PAPAVASILIOU, Anthony & OREN, Schmuel S., 2013. "Multiarea stochastic unit commitment for high wind penetration in a transmission constrained network," LIDAM Reprints CORE 2500, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
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