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Energy Storage Economic Analysis of Multi-Application Scenarios in an Electricity Market: A Case Study of China

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  • Zhixian Wang

    (Key Laboratory of Measurement and Control of Complex Systems of Engineering, Ministry of Education, Southeast University, Nanjing 210096, China)

  • Ying Wang

    (Key Laboratory of Measurement and Control of Complex Systems of Engineering, Ministry of Education, Southeast University, Nanjing 210096, China)

  • Qia Ding

    (NARI Technology Limited Company, Nanjing 211106, China)

  • Chen Wang

    (Key Laboratory of Measurement and Control of Complex Systems of Engineering, Ministry of Education, Southeast University, Nanjing 210096, China)

  • Kaifeng Zhang

    (Key Laboratory of Measurement and Control of Complex Systems of Engineering, Ministry of Education, Southeast University, Nanjing 210096, China)

Abstract

Energy storage has attracted more and more attention for its advantages in ensuring system safety and improving renewable generation integration. In the context of China’s electricity market restructuring, the economic analysis, including the cost and benefit analysis, of the energy storage with multi-applications is urgent for the market policy design in China. This paper uses an income statement based on the energy storage cost–benefit model to analyze the economic benefits of energy storage under multi-application scenarios (capacity, energy, and frequency regulation markets) in China’s future electricity market. The results show that the economic benefits of energy storage can be improved by joining in the capacity market (if it exists in the future) and increasing participation in the frequency regulation market. Nevertheless, the benefits under multi-application scenarios can hardly guarantee the cost recovery of energy storage under the current market mechanism or at the current price levels. Moreover, the economic benefits under different subsidy policies are studied, and the results show that energy storage can recover the cost with appropriate subsidy policies (the subsidy of 0.071 USD/kWh for pumped storage power stations is sufficient while the subsidy of 0.142 USD/kWh is required for electrochemical power stations). Finally, the sensitivity analysis of an energy storage power station to different price levels is carried out considering the difference in electricity price between China and the United States.

Suggested Citation

  • Zhixian Wang & Ying Wang & Qia Ding & Chen Wang & Kaifeng Zhang, 2020. "Energy Storage Economic Analysis of Multi-Application Scenarios in an Electricity Market: A Case Study of China," Sustainability, MDPI, vol. 12(20), pages 1-17, October.
    • Handle: RePEc:gam:jsusta:v:12:y:2020:i:20:p:8703-:d:431912
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    References listed on IDEAS

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    2. Chris Johnathon & Ashish Prakash Agalgaonkar & Joel Kennedy & Chayne Planiden, 2021. "Analyzing Electricity Markets with Increasing Penetration of Large-Scale Renewable Power Generation," Energies, MDPI, vol. 14(22), pages 1-15, November.

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