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The Value of Plug-In Hybrid Electric Vehicles as Grid Resources

Ramteen Sioshansi and Paul Denholm

Year: 2010
Volume: Volume 31
Number: Number 3
DOI: 10.5547/ISSN0195-6574-EJ-Vol31-No3-1
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Abstract:
Plug-in hybrid electric vehicles (PHEVs) can become valuable resources for an electric power system by providing vehicle to grid (V2G) services, such as energy storage and ancillary services. We use a unit commitment model of the Texas power system to simulate system operations with different-sized PHEV fleets that do and do not provide V2G services, to estimate the value of those services. We demonstrate that a PHEV fleet can provide benefits to the system, mainly through the provision of ancillary services, reducing the need to reserve conventional generator capacity. Moreover, our analysis shows that PHEV owners are made better off by providing V2G services and we demonstrate that these benefits can reduce the time it takes to recover the higher upfront capital cost of a PHEV when compared to other vehicle types.



Increasing the Value of Wind with Energy Storage

Ramteen Sioshansi

Year: 2011
Volume: Volume 32
Number: Number 2
DOI: 10.5547/ISSN0195-6574-EJ-Vol32-No2-1
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Abstract:
One economic disincentive to investing in wind generation is that the average market value of wind energy can be lower than that of other generation technologies. This is driven by the exercise of market power by other generators and the fact that the ability of these generators to exercise market power is inversely related to real-time wind availability. We examine the use of energy storage to mitigate this price suppression by shifting wind generation from periods with low prices to periods with higher prices. We show that storage can significantly increase the value of wind generation but the currently high capital cost of storage technologies cannot be justified on the basis of this use. Moreover, we demonstrate that this use of storage can reduce consumer surplus, the profits of other non-wind generators, and social welfare. We also examine the sensitivity of these effects to a number of parameters including storage size, storage efficiency, ownership structure, and market competitiveness--showing that a more-competitive market can make storage significantly more valuable to a wind generator.



Analyzing the Potential Economic Value of Energy Storage

Monica Giulietti, Luigi Grossi, Elisa Trujillo Baute, and Michael Waterson

Year: 2018
Volume: Volume 39
Number: Special Issue 1
DOI: 10.5547/01956574.39.SI1.mgiu
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Abstract:
This paper examines the commercial opportunities for electrical energy storage, taking market prices as given and determining the extent to which a strategy of arbitrage across the day, buying at the lowest price times at night and selling at the highest price times during the early evening, and relying on price forecasts one day-ahead generates profits in the British context. The paper sets out the potential problems as the market moves to absorb increasing amounts of wind, then characterises the nature of prices, which reveals the importance of a strategy in which power is absorbed into store for a relatively few hours of the day and discharged over a relatively few hours. It argues that additional incentives may need to be put into place in order to render storage over relatively longer periods more attractive and to deliver broader social benefits which are unlikely to be generated and captured as a result of purely commercial considerations.



The Economic Value of Distributed Storage at Different Locations on an Electric Grid

Wooyoung Jeon, Alberto J. Lamadrid, and Timothy D. Mount

Year: 2019
Volume: Volume 40
Number: Number 4
DOI: 10.5547/01956574.40.4.wjeo
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Abstract:
The objective of this article is to analyze the system benefits of distributed storage at different locations on a grid that has a high penetration of renewable generation. The chosen type of distributed storage modeled is deferrable demand (e.g., thermal storage) because it is relatively inexpensive to install compared to batteries and could potentially form a large component of the peak system load. The advantage of owning deferrable demand is that the purchase of energy from the grid can be decoupled from the delivery of an energy service to customers. Consequently, these customers can reduce costs by shifting their purchases from expensive peak periods to off-peak periods when electricity prices are low. In addition, deferrable demand can provide ramping services to the grid to mitigate the uncertainty of renewable generation. The primary economic issue addressed in this paper is to determine how the storage capacity is allocated between shifting load and providing ramping services. The basic economic tradeoff is between the benefit from shifting more load from peak periods to less expensive periods, and reserving some storage capacity for ramping to reduce the amount of conventional reserve capacity purchased. Our approach uses a new form of stochastic, multi-period Security Constrained Optimal Power Flow (SCOPF) that minimizes the expected system costs for energy and ancillary services over a 24-hour horizon. For each hour, five different levels of wind generation may be realized and these are treated as different system states with known probabilities of occurring. This model is applied to a reduction of the grid in New York State and New England and simulates the hourly load on a hot summer day, treating potential wind generation at different sites as stochastic inputs. The results determine the expected amount and location of conventional generating capacity dispatched, the reserve capacity committed to maintain operating reliability, the charging/discharging of storage capacity, and the amount of potential wind generation spilled. The results show there are major differences in how the deferrable demand at two large load centers, Boston and New York City, is managed, and we provide an explanation for these differences.



Merchant Storage Investment in a Restructured Electricity Industry

Afzal S. Siddiqui, Ramteen Sioshansi, and Antonio J. Conejo

Year: 2019
Volume: Volume 40
Number: Number 4
DOI: 10.5547/01956574.40.4.asid
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Abstract:
Restructuring and liberalisation of the electricity industry creates opportunities for investment in energy storage, which could be undertaken by a profit-maximising merchant storage operator. Because such a firm is concerned solely with maximising its own profit, the resulting storage-investment decision may be socially suboptimal (or detrimental). This paper develops a bi-level model of an imperfectly competitive electricity market. The modelling framework assumes electricity-generation and storage-operations decisions at the lower level and storage investment at the upper level. Our analytical results demonstrate that a relatively high (low) amount of market power in the generation sector leads to low (high) storage-capacity investment by the profit-maximising storage operator relative to a welfare maximiser. This can result in net social welfare losses with a profit-maximising storage operator compared to a no-storage case. Moreover, there are guaranteed to be net social welfare losses with a profit-maximising storage operator if the generation sector is sufficiently competitive. Using a charge on generation ramping between off- and on-peak periods, we induce the profit-maximising storage operator to invest in the same level of storage capacity as the welfare-maximising firm. Such a ramping charge can increase social welfare above the levels that are attained with a welfare-maximising storage operator.



Storage Business Models: Lessons for Electricity from Cloud Data, Frozen Food and Natural Gas

Karim L. Anaya and Michael G. Pollitt

Year: 2019
Volume: Volume 40
Number: The New Era of Energy Transition
DOI: 10.5547/01956574.40.SI1.kana
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Abstract:
The aim of this paper is to evaluate different well-established non-electric storage markets (cloud data, frozen food and natural gas) in order to identify relevant lessons for electrical energy storage (EES) connected to electricity distribution networks. The case studies that have been evaluated are Google Drive (cloud storage), Oakland International (frozen food storage) and Centrica Storage (gas storage). A specific business model methodology has been selected for comparing the different business model components across these sectors. The methodology (following Johnson et al., 2008) refers to key interconnected components: customer value proposition, the revenue formula, key resources and key processes. The evaluation of the three case studies suggests that well-developed business models already exist in growing and mature storage markets. Regulation plays also an important role across the different storage markets and business model components, however its importance varies depending on the type of market. Innovation in storage business models is also observed (technological and contractual) which should also be facilitated in EES. Innovation helps move storage markets towards more sustainable business models.





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