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The impact of electricity storage on wholesale electricity prices

Author

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  • Nyamdash, Batsaikhan
  • Denny, Eleanor

Abstract

This paper analyzes the impact of electricity storage on the production cost of a power system and the marginal cost of electricity (electricity price) using a unit commitment model. Also real world data has been analyzed to verify the e®ect of storage operation on the electricity price using econometric techniques. The unit commitment model found that the deployment of a storage system reduces the fuel cost of the power system but increases the average electricity price through its e®ect on the power system operation. However, the reduction in the production cost was found to be less than the increase in the consumer's cost of electricity resulting in a net increase in costs due to storage. Di®erent storage and CO2 price scenarios were investigated to study the sensitivity of these results. The regression analysis supports the unit commitment results and ¯nds that the presence of storage increases average wholesale electricity prices for the case study system.

Suggested Citation

  • Nyamdash, Batsaikhan & Denny, Eleanor, 2011. "The impact of electricity storage on wholesale electricity prices," MPRA Paper 34941, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:34941
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    File URL: https://mpra.ub.uni-muenchen.de/34941/1/MPRA_paper_34941.pdf
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    References listed on IDEAS

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    1. Tuohy, Aidan & Meibom, Peter & Denny, Eleanor & O'Malley, Mark, 2009. "Unit commitment for systems with significant wind penetration," MPRA Paper 34849, University Library of Munich, Germany.
    2. Benitez, Liliana E. & Benitez, Pablo C. & van Kooten, G. Cornelis, 2008. "The economics of wind power with energy storage," Energy Economics, Elsevier, vol. 30(4), pages 1973-1989, July.
    3. Crampes, Claude & Moreaux, Michel, 2010. "Pumped storage and cost saving," Energy Economics, Elsevier, vol. 32(2), pages 325-333, March.
    4. Ramteen Sioshansi, 2011. "Increasing the Value of Wind with Energy Storage," The Energy Journal, International Association for Energy Economics, vol. 0(Number 2), pages 1-30.
    5. Troy, Niamh & Denny, Eleanor & O'Malley, Mark, 2010. "Base-load cycling on a system with significant wind penetration," MPRA Paper 34848, University Library of Munich, Germany.
    6. Zafirakis, D. & Kaldellis, J.K., 2009. "Economic evaluation of the dual mode CAES solution for increased wind energy contribution in autonomous island networks," Energy Policy, Elsevier, vol. 37(5), pages 1958-1969, May.
    7. Tuohy, A. & O'Malley, M., 2011. "Pumped storage in systems with very high wind penetration," Energy Policy, Elsevier, vol. 39(4), pages 1965-1974, April.
    8. Ramteen Sioshansi, 2010. "Welfare Impacts of Electricity Storage and the Implications of Ownership Structure," The Energy Journal, International Association for Energy Economics, vol. 0(Number 2), pages 173-198.
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    Citations

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    Cited by:

    1. Després, Jacques & Hadjsaid, Nouredine & Criqui, Patrick & Noirot, Isabelle, 2015. "Modelling the impacts of variable renewable sources on the power sector: Reconsidering the typology of energy modelling tools," Energy, Elsevier, vol. 80(C), pages 486-495.
    2. Chen, Yang & Hu, Mengqi & Zhou, Zhi, 2017. "A data-driven analytical approach to enable optimal emerging technologies integration in the co-optimized electricity and ancillary service markets," Energy, Elsevier, vol. 122(C), pages 613-626.
    3. Raugei, Marco & Leccisi, Enrica, 2016. "A comprehensive assessment of the energy performance of the full range of electricity generation technologies deployed in the United Kingdom," Energy Policy, Elsevier, vol. 90(C), pages 46-59.
    4. Jacques Després, 2015. "Development of a dispatch model of the European power system for coupling with a long-term foresight energy model," Working Papers hal-01245554, HAL.
    5. Tom Brijs & Frederik Geth & Sauleh Siddiqui & Benjamin F. Hobbs & Ronnie Belmans, 2016. "Price-Based Unit Commitment Electricity Storage Arbitrage with Piecewise Linear Price-Effects," Discussion Papers of DIW Berlin 1567, DIW Berlin, German Institute for Economic Research.
    6. repec:mje:mjejnl:v:13:y:2017:i:4:p:43-59 is not listed on IDEAS
    7. Jacques Després & Patrick Criqui & Silvana Mima & Nouredine Hadjsaid & Isabelle Noirot, 2014. "Variable renewable energies and storage development in long term energy modelling tools," Post-Print hal-01279467, HAL.
    8. Jacques Després & Patrick Criqui & Silvana Mima & Nouredine Hadjsaid & Isabelle Noirot, 2014. "Analysing the interactions between Variable Renewable Energies, electricity storage and grid in long term energy modelling tools," Post-Print hal-01279461, HAL.

    More about this item

    Keywords

    Electricity storage; Electricity price; Production cost;

    JEL classification:

    • P28 - Economic Systems - - Socialist Systems and Transition Economies - - - Natural Resources; Environment
    • D4 - Microeconomics - - Market Structure, Pricing, and Design
    • Q4 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy

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