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Estimating the value of electricity storage in PJM: Arbitrage and some welfare effects

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  • Sioshansi, Ramteen
  • Denholm, Paul
  • Jenkin, Thomas
  • Weiss, Jurgen

Abstract

Significant increases in prices and price volatility of natural gas and electricity have raised interest in the potential economic opportunities for electricity storage. In this paper, we analyze the arbitrage value of a price-taking storage device in PJM during the six-year period from 2002 to 2007, to understand the impact of fuel prices, transmission constraints, efficiency, storage capacity, and fuel mix. The impact of load-shifting for larger amounts of storage, where reductions in arbitrage are offset by shifts in consumer and producer surplus as well as increases in social welfare from a variety of sources, is also considered.

Suggested Citation

  • Sioshansi, Ramteen & Denholm, Paul & Jenkin, Thomas & Weiss, Jurgen, 2009. "Estimating the value of electricity storage in PJM: Arbitrage and some welfare effects," Energy Economics, Elsevier, vol. 31(2), pages 269-277, March.
    • Handle: RePEc:eee:eneeco:v:31:y:2009:i:2:p:269-277
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    References listed on IDEAS

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    1. Graves, Frank & Jenkin, Thomas & Murphy, Dean, 1999. "Opportunities for Electricity Storage in Deregulating Markets," The Electricity Journal, Elsevier, vol. 12(8), pages 46-56, October.
    2. Walawalkar, Rahul & Apt, Jay & Mancini, Rick, 2007. "Economics of electric energy storage for energy arbitrage and regulation in New York," Energy Policy, Elsevier, vol. 35(4), pages 2558-2568, April.
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