IAEE Members and subscribers to The Energy Journal: Please log in to access the full text article or receive discounted pricing for this article.

Prepress Content: The following article is a preprint of a scientific paper that has completed the peer-review process and been accepted for publication within The Energy Journal.

While the International Association for Energy Economics (IAEE) makes every effort to ensure the veracity of the material and the accuracy of the data therein, IAEE is not responsible for the citing of this content until the article is actually printed in a final version of The Energy Journal. For example, preprinted articles are often moved from issue to issue affecting page numbers, and actual volume and issue numbers. Care should be given when citing Energy Journal preprint articles.

What Duality Theory Tells Us About Giving Market Operators the Authority to Dispatch Energy Storage

There is a debate about which entity should have the authority to dispatch energy storage that participates in restructured wholesale electricity markets. Some stakeholders raise concerns that market operators' independence can be threatened if they make operational decisions for energy storage. The rationale that underlies this concern is that operating energy storage can affect the balance of the system and price formation. We demonstrate that having market operators make operational decisions for energy storage does not change the fundamental nature of the optimal-power-flow problem. Using duality theory, we show that if market operators co-optimize the operation of energy storage with that of generators and transmission, the optimal-power-flow problem yields short-run dispatch support and incentive compatibility and long-run efficiency. These findings are analogous to those for having market operators co-optimize transmission use with generator dispatch. Our work suggests that concerns around giving market operators the authority to dispatch energy storage are misplaced.

Download Executive Summary Purchase ( $25 )

Keywords: Energy storage, Energy policy, Electricity-market design, Energy pricing, Investment, Optimal power flow, Duality theory

DOI: 10.5547/01956574.44.2.yjia

References: Reference information is available for this article. Join IAEE, log in, or purchase the article to view reference data.

Published in Volume 44, Number 3 of the bi-monthly journal of the IAEE's Energy Economics Education Foundation.


© 2023 International Association for Energy Economics | Privacy Policy | Return Policy