TY - GEN
T1 - Economy of electricity storage in the Nordic electricity market
T2 - 11th International Conference on the European Energy Market, EEM 2014
AU - Zakeri, Behnam
AU - Syri, Sanna
PY - 2014
Y1 - 2014
N2 - Energy storage systems can be employed for benefiting from price arbitrage, smoothing the imbalance in the power systems for higher integration of intermittent renewable energy, and power quality services. The economic implications of electric energy storage systems should be analyzed based on the characteristics of each electricity market. To this end, in this study, costs and potential benefits of electricity storage in the Nordic power market are examined for the case of Finland, based on the historical prices in 2009-2013. We examine different electrical energy storage systems including pumped hydro, compressed air, NaS, lead acid, and vanadium-redox flow batteries. An algorithm is presented to determine the optimal life cycles of batteries to make the highest benefit to cost ratio. The optimal size of each electricity storage system is also analyzed for each operating market (day-ahead and balancing market). While no storage system is purely profitable in intraday price arbitrage, the results show that pumped hydro has the highest annual benefit-to-cost ratio, up to 25 % in day-ahead (Elspot) and 75% in balancing market. The levelized cost of power generation for pumped hydro is 32-46 €/MWh plus the cost of charging electricity for the Finnish power market. Other possible benefits for electricity storage are examined, including frequency-controlled normal and disturbance reserve. The results demonstrate that none of the batteries are profitable even with the aggregation of revenues from ancillary services, under current market conditions.
AB - Energy storage systems can be employed for benefiting from price arbitrage, smoothing the imbalance in the power systems for higher integration of intermittent renewable energy, and power quality services. The economic implications of electric energy storage systems should be analyzed based on the characteristics of each electricity market. To this end, in this study, costs and potential benefits of electricity storage in the Nordic power market are examined for the case of Finland, based on the historical prices in 2009-2013. We examine different electrical energy storage systems including pumped hydro, compressed air, NaS, lead acid, and vanadium-redox flow batteries. An algorithm is presented to determine the optimal life cycles of batteries to make the highest benefit to cost ratio. The optimal size of each electricity storage system is also analyzed for each operating market (day-ahead and balancing market). While no storage system is purely profitable in intraday price arbitrage, the results show that pumped hydro has the highest annual benefit-to-cost ratio, up to 25 % in day-ahead (Elspot) and 75% in balancing market. The levelized cost of power generation for pumped hydro is 32-46 €/MWh plus the cost of charging electricity for the Finnish power market. Other possible benefits for electricity storage are examined, including frequency-controlled normal and disturbance reserve. The results demonstrate that none of the batteries are profitable even with the aggregation of revenues from ancillary services, under current market conditions.
KW - Cost of electricity storage
KW - Electricity market
KW - Energy storage
KW - Price arbitrage
KW - Smart grid
UR - http://www.scopus.com/inward/record.url?scp=84905715612&partnerID=8YFLogxK
U2 - 10.1109/EEM.2014.6861293
DO - 10.1109/EEM.2014.6861293
M3 - Contribution to conference proceedings
AN - SCOPUS:84905715612
SN - 9781479960941
T3 - International Conference on the European Energy Market, EEM
BT - EEM 2014 - 11th International Conference on the European Energy Market
PB - IEEE Computer Society
CY - New York
Y2 - 28 May 2014 through 30 May 2014
ER -