IDEAS home Printed from https://ideas.repec.org/a/gam/jsusta/v11y2019i1p186-d194312.html
   My bibliography  Save this article

Feasibility Analysis of Behind-the-Meter Energy Storage System According to Public Policy on an Electricity Charge Discount Program

Author

Listed:
  • Byuk-Keun Jo

    (School of Electrical Engineering, Korea University, Anam Campus, 145 Anam-ro, Seongbuk-gu, Seoul 02841, Korea
    Regional Cooperation Division, Korea Energy Agency, 388 Poeun Dae-ro, Suji-gu, Yongin-si, Gyunggi-do 16842, Korea)

  • Seungmin Jung

    (Department of Electrical Engineering, Hanbat National University, 125 Dongseo-daero, Yuseong-gu, Daejeon 34158, Korea)

  • Gilsoo Jang

    (School of Electrical Engineering, Korea University, Anam Campus, 145 Anam-ro, Seongbuk-gu, Seoul 02841, Korea)

Abstract

Energy storage systems are crucial in dealing with challenges from the high-level penetration of renewable energy, which has inherently intermittent characteristics. For this reason, various incentive schemes improving the economic profitability of energy storage systems are underway in many countries with an aim to expand the participation rate. The electricity charge discount program, which was introduced in 2015 in Korea, is one of the policies meant to support the economic feasibility of demand-side energy storage systems. This paper quantitatively evaluated the impact of the electricity charge discount program on the economic feasibility of behind-the-meter energy storage systems. In this work, we first summarized how electricity customers can benefit from behind-the-meter energy storage systems. In addition, we represented details of the structure that make up the electricity charge discount program, i.e., how the electricity charge is discounted through the discount scheme. An optimization problem that establishes a charge and discharge schedule of an energy storage system to minimize each consumer’s electricity expenditure was defined and formulated as well. The case study results indicated that the electricity charge discount program has improved the profitability of behind-the-meter energy storage systems, and this improved profitability led to investment in behind-the-meter energy storage systems in Korea. As a result of the electricity charge discount program, Korea’s domestic demand side energy storage system market size, which was only 27 billion dollars in 2015 in Korea, has grown to 825 billion dollars in 2018.

Suggested Citation

  • Byuk-Keun Jo & Seungmin Jung & Gilsoo Jang, 2019. "Feasibility Analysis of Behind-the-Meter Energy Storage System According to Public Policy on an Electricity Charge Discount Program," Sustainability, MDPI, vol. 11(1), pages 1-17, January.
    • Handle: RePEc:gam:jsusta:v:11:y:2019:i:1:p:186-:d:194312
    as

    Download full text from publisher

    File URL: https://www.mdpi.com/2071-1050/11/1/186/pdf
    Download Restriction: no
    File URL: https://www.mdpi.com/2071-1050/11/1/186/
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Yekini Suberu, Mohammed & Wazir Mustafa, Mohd & Bashir, Nouruddeen, 2014. "Energy storage systems for renewable energy power sector integration and mitigation of intermittency," Renewable and Sustainable Energy Reviews, Elsevier, vol. 35(C), pages 499-514.
    2. Rodrigo Martins & Holger C. Hesse & Johanna Jungbauer & Thomas Vorbuchner & Petr Musilek, 2018. "Optimal Component Sizing for Peak Shaving in Battery Energy Storage System for Industrial Applications," Energies, MDPI, vol. 11(8), pages 1-22, August.
    3. Winfield, Mark & Shokrzadeh, Shahab & Jones, Adam, 2018. "Energy policy regime change and advanced energy storage: A comparative analysis," Energy Policy, Elsevier, vol. 115(C), pages 572-583.
    4. Babacan, Oytun & Ratnam, Elizabeth L. & Disfani, Vahid R. & Kleissl, Jan, 2017. "Distributed energy storage system scheduling considering tariff structure, energy arbitrage and solar PV penetration," Applied Energy, Elsevier, vol. 205(C), pages 1384-1393.
    5. Zhao, Haoran & Wu, Qiuwei & Hu, Shuju & Xu, Honghua & Rasmussen, Claus Nygaard, 2015. "Review of energy storage system for wind power integration support," Applied Energy, Elsevier, vol. 137(C), pages 545-553.
    6. Berrada, Asmae & Loudiyi, Khalid & Zorkani, Izeddine, 2016. "Valuation of energy storage in energy and regulation markets," Energy, Elsevier, vol. 115(P1), pages 1109-1118.
    7. Simona-Vasilica Oprea & Adela Bâra & Adina Ileana Uță & Alexandru Pîrjan & George Căruțașu, 2018. "Analyses of Distributed Generation and Storage Effect on the Electricity Consumption Curve in the Smart Grid Context," Sustainability, MDPI, vol. 10(7), pages 1-25, July.
    8. Pearre, Nathaniel S. & Swan, Lukas G., 2015. "Technoeconomic feasibility of grid storage: Mapping electrical services and energy storage technologies," Applied Energy, Elsevier, vol. 137(C), pages 501-510.
    9. Yohwan Choi & Hongseok Kim, 2016. "Optimal Scheduling of Energy Storage System for Self-Sustainable Base Station Operation Considering Battery Wear-Out Cost," Energies, MDPI, vol. 9(6), pages 1-19, June.
    10. Matteo Manganelli & Mario Nicodemo & Luigi D’Orazio & Laura Pimpinella & Maria Carmen Falvo, 2018. "Restoration of an Active MV Distribution Grid with a Battery ESS: A Real Case Study," Sustainability, MDPI, vol. 10(6), pages 1-17, June.
    11. Uddin, Moslem & Romlie, Mohd Fakhizan & Abdullah, Mohd Faris & Abd Halim, Syahirah & Abu Bakar, Ab Halim & Chia Kwang, Tan, 2018. "A review on peak load shaving strategies," Renewable and Sustainable Energy Reviews, Elsevier, vol. 82(P3), pages 3323-3332.
    12. Jason Moore & Bahman Shabani, 2016. "A Critical Study of Stationary Energy Storage Policies in Australia in an International Context: The Role of Hydrogen and Battery Technologies," Energies, MDPI, vol. 9(9), pages 1-28, August.
    13. Walawalkar, Rahul & Apt, Jay & Mancini, Rick, 2007. "Economics of electric energy storage for energy arbitrage and regulation in New York," Energy Policy, Elsevier, vol. 35(4), pages 2558-2568, April.
    14. 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.
    15. Omowunmi Mary Longe & Khmaies Ouahada & Suvendi Rimer & Ashot N. Harutyunyan & Hendrik C. Ferreira, 2017. "Distributed Demand Side Management with Battery Storage for Smart Home Energy Scheduling," Sustainability, MDPI, vol. 9(1), pages 1-13, January.
    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. Jihun Jung & Keon Baek & Eunjung Lee & Woong Ko & Jinho Kim, 2021. "Economic Analysis of Special Rate for Renewable Energy Based on the Design of an Optimized Model for Distributed Energy Resource Capacities in Buildings," Energies, MDPI, vol. 14(3), pages 1-19, January.
    2. Jaewan Suh & Minhan Yoon & Seungmin Jung, 2020. "Practical Application Study for Precision Improvement Plan for Energy Storage Devices Based on Iterative Methods," Energies, MDPI, vol. 13(3), pages 1-13, February.
    3. Chawin Prapanukool & Surachai Chaitusaney, 2020. "Designing Solar Power Purchase Agreement of Rooftop PVs with Battery Energy Storage Systems under the Behind-the-Meter Scheme," Energies, MDPI, vol. 13(17), pages 1-18, August.
    4. Byuk-Keun Jo & Gilsoo Jang, 2019. "An Evaluation of the Effect on the Expansion of Photovoltaic Power Generation According to Renewable Energy Certificates on Energy Storage Systems: A Case Study of the Korean Renewable Energy Market," Sustainability, MDPI, vol. 11(16), pages 1-17, August.

    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. Antweiler, Werner, 2021. "Microeconomic models of electricity storage: Price Forecasting, arbitrage limits, curtailment insurance, and transmission line utilization," Energy Economics, Elsevier, vol. 101(C).
    2. McPherson, Madeleine & Tahseen, Samiha, 2018. "Deploying storage assets to facilitate variable renewable energy integration: The impacts of grid flexibility, renewable penetration, and market structure," Energy, Elsevier, vol. 145(C), pages 856-870.
    3. Martin, Nigel & Rice, John, 2021. "Power outages, climate events and renewable energy: Reviewing energy storage policy and regulatory options for Australia," Renewable and Sustainable Energy Reviews, Elsevier, vol. 137(C).
    4. Arcos-Vargas, Ángel & Canca, David & Núñez, Fernando, 2020. "Impact of battery technological progress on electricity arbitrage: An application to the Iberian market," Applied Energy, Elsevier, vol. 260(C).
    5. Núñez, Fernando & Canca, David & Arcos-Vargas, Ángel, 2022. "An assessment of European electricity arbitrage using storage systems," Energy, Elsevier, vol. 242(C).
    6. Goteti, Naga Srujana & Hittinger, Eric & Sergi, Brian & Lima Azevedo, Inês, 2021. "How does new energy storage affect the operation and revenue of existing generation?," Applied Energy, Elsevier, vol. 285(C).
    7. Keck, Felix & Lenzen, Manfred & Vassallo, Anthony & Li, Mengyu, 2019. "The impact of battery energy storage for renewable energy power grids in Australia," Energy, Elsevier, vol. 173(C), pages 647-657.
    8. Biggins, F.A.V. & Travers, D. & Ejeh, J.O. & Lee, R. & Buckley, A. & Brown, S., 2023. "The economic impact of location on a solar farm co-located with energy storage," Energy, Elsevier, vol. 278(C).
    9. Keck, Felix & Lenzen, Manfred, 2021. "Drivers and benefits of shared demand-side battery storage – an Australian case study," Energy Policy, Elsevier, vol. 149(C).
    10. Subodh Kharel & Bahman Shabani, 2018. "Hydrogen as a Long-Term Large-Scale Energy Storage Solution to Support Renewables," Energies, MDPI, vol. 11(10), pages 1-17, October.
    11. Jeon, Wooyoung & Mo, Jung Youn, 2018. "The true economic value of supply-side energy storage in the smart grid environment – The case of Korea," Energy Policy, Elsevier, vol. 121(C), pages 101-111.
    12. Chazarra, Manuel & Pérez-Díaz, Juan I. & García-González, Javier & Praus, Roland, 2018. "Economic viability of pumped-storage power plants participating in the secondary regulation service," Applied Energy, Elsevier, vol. 216(C), pages 224-233.
    13. Jungsub Sim & Minsoo Kim & Dongjoo Kim & Hongseok Kim, 2021. "Cloud Energy Storage System Operation with Capacity P2P Transaction," Energies, MDPI, vol. 14(2), pages 1-13, January.
    14. Pedro Crespo Del Granado & Stein Wallace & Zhan Pang, 2016. "The impact of wind uncertainty on the strategic valuation of distributed electricity storage," Computational Management Science, Springer, vol. 13(1), pages 5-27, January.
    15. Nallapaneni Manoj Kumar & Aneesh A. Chand & Maria Malvoni & Kushal A. Prasad & Kabir A. Mamun & F.R. Islam & Shauhrat S. Chopra, 2020. "Distributed Energy Resources and the Application of AI, IoT, and Blockchain in Smart Grids," Energies, MDPI, vol. 13(21), pages 1-42, November.
    16. Mehrabankhomartash, Mahmoud & Rayati, Mohammad & Sheikhi, Aras & Ranjbar, Ali Mohammad, 2017. "Practical battery size optimization of a PV system by considering individual customer damage function," Renewable and Sustainable Energy Reviews, Elsevier, vol. 67(C), pages 36-50.
    17. McConnell, Dylan & Forcey, Tim & Sandiford, Mike, 2015. "Estimating the value of electricity storage in an energy-only wholesale market," Applied Energy, Elsevier, vol. 159(C), pages 422-432.
    18. Dusonchet, L. & Favuzza, S. & Massaro, F. & Telaretti, E. & Zizzo, G., 2019. "Technological and legislative status point of stationary energy storages in the EU," Renewable and Sustainable Energy Reviews, Elsevier, vol. 101(C), pages 158-167.
    19. Lange, Christopher & Rueß, Alexandra & Nuß, Andreas & Öchsner, Richard & März, Martin, 2020. "Dimensioning battery energy storage systems for peak shaving based on a real-time control algorithm," Applied Energy, Elsevier, vol. 280(C).
    20. 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.

    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:gam:jsusta:v:11:y:2019:i:1:p:186-:d:194312. 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: MDPI Indexing Manager (email available below). General contact details of provider: https://www.mdpi.com .

    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.