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Economic Value of Li-ion Energy Storage System in Frequency Regulation Application from Utility Firm’s Perspective in Korea

Author

Listed:
  • Wonchang Hur

    (College of Business Administration, Inha University, Incheon 431050, Korea)

  • Yongma Moon

    (College of Business Administration, University of Seoul, Seoul 130743, Korea)

  • Kwangsup Shin

    (Graduate School of Logistics, Incheon National University, Incheon 406772, Korea)

  • Wooje Kim

    (College of Business and Technology, Seoul National University of Science and Technology, Seoul 139743, Korea)

  • Suchul Nam

    (KEPCO Research Institute, Daejeon 305760, Korea)

  • Kijun Park

    (KEPCO Research Institute, Daejeon 305760, Korea)

Abstract

Energy Storage Systems (ESSs) have recently been highlighted because of their many benefits such as load-shifting, frequency regulation, price arbitrage, renewables, and so on. Among those benefits, we aim at evaluating their economic value in frequency regulation application. However, unlike previous literature focusing on profits obtained from participating in the ancillary service market, our approach concentrates on the cost reduction from the perspective of a utility firm that has an obligation to pay energy fees to a power exchange. More specifically, we focus on the payments between the power exchange market and the utility firm as a major source of economic benefits. The evaluation is done by cost- benefit analysis (CBA) with a dataset of the Korean market while considering operational constraint costs as well as scheduled energy payments, and a simulation algorithm for the evaluation is provided. Our results show the potential for huge profits to be made by cost reduction. We believe that this research can provide a guideline for a utility firm considering investing in ESSs for frequency regulation application as a source of cost reduction.

Suggested Citation

  • Wonchang Hur & Yongma Moon & Kwangsup Shin & Wooje Kim & Suchul Nam & Kijun Park, 2015. "Economic Value of Li-ion Energy Storage System in Frequency Regulation Application from Utility Firm’s Perspective in Korea," Energies, MDPI, vol. 8(6), pages 1-18, May.
    • Handle: RePEc:gam:jeners:v:8:y:2015:i:6:p:5000-5017:d:50337
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    References listed on IDEAS

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    Cited by:

    1. Nam-Du Nguyen-Hoang & Wooyoung Shin & Choongman Lee & In-Young Chung & Dongha Kim & Young-Ha Hwang & Juyoung Youn & Jwayoung Maeng & Minhan Yoon & Kyeon Hur & Jae Woong Shim, 2022. "Operation Method of Energy Storage System Replacing Governor for Frequency Regulation of Synchronous Generator without Reserve," Energies, MDPI, vol. 15(3), pages 1-16, January.
    2. Minhan Yoon & Jaehyeong Lee & Sungyoon Song & Yeontae Yoo & Gilsoo Jang & Seungmin Jung & Sungchul Hwang, 2019. "Utilization of Energy Storage System for Frequency Regulation in Large-Scale Transmission System," Energies, MDPI, vol. 12(20), pages 1-13, October.
    3. Kim, Wook-Won & Shin, Je-Seok & Kim, Sung-Yul & Kim, Jin-O., 2017. "Operation scheduling for an energy storage system considering reliability and aging," Energy, Elsevier, vol. 141(C), pages 389-397.
    4. Hee-Jun Cha & Sung-Eun Lee & Dongjun Won, 2019. "Implementation of Optimal Scheduling Algorithm for Multi-Functional Battery Energy Storage System," Energies, MDPI, vol. 12(7), pages 1-17, April.
    5. Mayyas, Ahmad & Chadly, Assia & Amer, Saed Talib & Azar, Elie, 2022. "Economics of the Li-ion batteries and reversible fuel cells as energy storage systems when coupled with dynamic electricity pricing schemes," Energy, Elsevier, vol. 239(PA).
    6. Sung-Min Cho & Sang-Yun Yun, 2017. "Optimal Power Assignment of Energy Storage Systems to Improve the Energy Storage Efficiency for Frequency Regulation," Energies, MDPI, vol. 10(12), pages 1-13, December.
    7. Chen, A.A. & Stephens, A.J. & Koon Koon, R. & Ashtine, M. & Mohammed-Koon Koon, K, 2020. "Pathways to climate change mitigation and stable energy by 100% renewable for a small island: Jamaica as an example," Renewable and Sustainable Energy Reviews, Elsevier, vol. 121(C).

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