IDEAS home Printed from https://ideas.repec.org/a/eee/energy/v145y2018icp856-870.html
   My bibliography  Save this article

Deploying storage assets to facilitate variable renewable energy integration: The impacts of grid flexibility, renewable penetration, and market structure

Author

Listed:
  • McPherson, Madeleine
  • Tahseen, Samiha

Abstract

As variable renewable wind and solar resources constitute a larger fraction of electricity supply, interest in flexible resources, including demand response, dispatchable generation, transmission interconnection, and storage technologies is growing. This paper evaluates the utility of storage assets given different electricity system configurations, market paradigms, and management schemes using a production cost model. When a large share of non-renewable generation is derived from inflexible sources, storage is imperative even at relatively low renewable penetrations. At high renewable penetrations, storage becomes increasingly important in flexible systems as well. In addition to renewable penetration, storage utilization rates are sensitive to the storage assets' market bidding structure and ownership paradigm, particularly in inflexible electricity systems. Storage assets consume during low-cost hours and generate during high-cost hours, regardless of bidding structure, but the price delta is largest for a centrally-controlled storage asset bidding with a price arbitrage motive. Storage utility cannot be deduced from an individual metric, but rather depends on the interaction between bidding mechanism, renewable penetration, and system flexibility.

Suggested Citation

  • McPherson, Madeleine & Tahseen, Samiha, 2018. "Deploying storage assets to facilitate variable renewable energy integration: The impacts of grid flexibility, renewable penetration, and market structure," Energy, Elsevier, vol. 145(C), pages 856-870.
    • Handle: RePEc:eee:energy:v:145:y:2018:i:c:p:856-870
    DOI: 10.1016/j.energy.2018.01.002
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0360544218300021
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.energy.2018.01.002?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Katsaprakakis, Dimitris Al. & Christakis, Dimitris G. & Stefanakis, Ioannis & Spanos, Petros & Stefanakis, Nikos, 2013. "Technical details regarding the design, the construction and the operation of seawater pumped storage systems," Energy, Elsevier, vol. 55(C), pages 619-630.
    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.
    3. Huber, Matthias & Dimkova, Desislava & Hamacher, Thomas, 2014. "Integration of wind and solar power in Europe: Assessment of flexibility requirements," Energy, Elsevier, vol. 69(C), pages 236-246.
    4. de Boer, Harmen Sytze & Grond, Lukas & Moll, Henk & Benders, René, 2014. "The application of power-to-gas, pumped hydro storage and compressed air energy storage in an electricity system at different wind power penetration levels," Energy, Elsevier, vol. 72(C), pages 360-370.
    5. Foley, A. & Díaz Lobera, I., 2013. "Impacts of compressed air energy storage plant on an electricity market with a large renewable energy portfolio," Energy, Elsevier, vol. 57(C), pages 85-94.
    6. McPherson, Madeleine & Karney, Bryan, 2017. "A scenario based approach to designing electricity grids with high variable renewable energy penetrations in Ontario, Canada: Development and application of the SILVER model," Energy, Elsevier, vol. 138(C), pages 185-196.
    7. Nyamdash, Batsaikhan & Denny, Eleanor & O'Malley, Mark, 2010. "The viability of balancing wind generation with large scale energy storage," Energy Policy, Elsevier, vol. 38(11), pages 7200-7208, November.
    8. 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.
    9. Evans, Annette & Strezov, Vladimir & Evans, Tim J., 2012. "Assessment of utility energy storage options for increased renewable energy penetration," Renewable and Sustainable Energy Reviews, Elsevier, vol. 16(6), pages 4141-4147.
    10. Zhao, Haoran & Wu, Qiuwei & Hu, Shuju & Xu, Honghua & Rasmussen, Claus Nygaard, 2015. "Review of energy storage system for wind power integration support," Applied Energy, Elsevier, vol. 137(C), pages 545-553.
    11. Gils, Hans Christian & Scholz, Yvonne & Pregger, Thomas & Luca de Tena, Diego & Heide, Dominik, 2017. "Integrated modelling of variable renewable energy-based power supply in Europe," Energy, Elsevier, vol. 123(C), pages 173-188.
    12. Berrada, Asmae & Loudiyi, Khalid & Zorkani, Izeddine, 2016. "Valuation of energy storage in energy and regulation markets," Energy, Elsevier, vol. 115(P1), pages 1109-1118.
    13. Mikkola, Jani & Lund, Peter D., 2016. "Modeling flexibility and optimal use of existing power plants with large-scale variable renewable power schemes," Energy, Elsevier, vol. 112(C), pages 364-375.
    14. Madeleine McPherson & Theofilos Sotiropoulos-Michalakakos & LD Danny Harvey & Bryan Karney, 2017. "An Open-Access Web-Based Tool to Access Global, Hourly Wind and Solar PV Generation Time-Series Derived from the MERRA Reanalysis Dataset," Energies, MDPI, vol. 10(7), pages 1-14, July.
    15. Becker, Sarah & Frew, Bethany A. & Andresen, Gorm B. & Zeyer, Timo & Schramm, Stefan & Greiner, Martin & Jacobson, Mark Z., 2014. "Features of a fully renewable US electricity system: Optimized mixes of wind and solar PV and transmission grid extensions," Energy, Elsevier, vol. 72(C), pages 443-458.
    16. Muche, Thomas, 2009. "A real option-based simulation model to evaluate investments in pump storage plants," Energy Policy, Elsevier, vol. 37(11), pages 4851-4862, November.
    17. Ming, Zeng & Kun, Zhang & Daoxin, Liu, 2013. "Overall review of pumped-hydro energy storage in China: Status quo, operation mechanism and policy barriers," Renewable and Sustainable Energy Reviews, Elsevier, vol. 17(C), pages 35-43.
    18. Connolly, D. & Lund, H. & Finn, P. & Mathiesen, B.V. & Leahy, M., 2011. "Practical operation strategies for pumped hydroelectric energy storage (PHES) utilising electricity price arbitrage," Energy Policy, Elsevier, vol. 39(7), pages 4189-4196, July.
    19. Lund, Henrik & Østergaard, Poul Alberg & Connolly, David & Mathiesen, Brian Vad, 2017. "Smart energy and smart energy systems," Energy, Elsevier, vol. 137(C), pages 556-565.
    20. Kazempour, S. Jalal & Moghaddam, M. Parsa & Haghifam, M.R. & Yousefi, G.R., 2009. "Electric energy storage systems in a market-based economy: Comparison of emerging and traditional technologies," Renewable Energy, Elsevier, vol. 34(12), pages 2630-2639.
    21. Wolf-Peter Schill & Michael Pahle & Christian Gambardella, 2016. "On Start-up Costs of Thermal Power Plants in Markets with Increasing Shares of Fluctuating Renewables," Discussion Papers of DIW Berlin 1540, DIW Berlin, German Institute for Economic Research.
    22. van der Linden, Septimus, 2006. "Bulk energy storage potential in the USA, current developments and future prospects," Energy, Elsevier, vol. 31(15), pages 3446-3457.
    23. Cavallo, Alfred, 2007. "Controllable and affordable utility-scale electricity from intermittent wind resources and compressed air energy storage (CAES)," Energy, Elsevier, vol. 32(2), pages 120-127.
    24. Frew, Bethany A. & Becker, Sarah & Dvorak, Michael J. & Andresen, Gorm B. & Jacobson, Mark Z., 2016. "Flexibility mechanisms and pathways to a highly renewable US electricity future," Energy, Elsevier, vol. 101(C), pages 65-78.
    25. Loisel, Rodica & Mercier, Arnaud & Gatzen, Christoph & Elms, Nick & Petric, Hrvoje, 2010. "Valuation framework for large scale electricity storage in a case with wind curtailment," Energy Policy, Elsevier, vol. 38(11), pages 7323-7337, November.
    26. Fitzgerald, Niall & Lacal Arántegui, Roberto & McKeogh, Eamon & Leahy, Paul, 2012. "A GIS-based model to calculate the potential for transforming conventional hydropower schemes and non-hydro reservoirs to pumped hydropower schemes," Energy, Elsevier, vol. 41(1), pages 483-490.
    27. Denholm, Paul & Hand, Maureen, 2011. "Grid flexibility and storage required to achieve very high penetration of variable renewable electricity," Energy Policy, Elsevier, vol. 39(3), pages 1817-1830, March.
    28. Connolly, D. & MacLaughlin, S. & Leahy, M., 2010. "Development of a computer program to locate potential sites for pumped hydroelectric energy storage," Energy, Elsevier, vol. 35(1), pages 375-381.
    29. Krajačić, Goran & Lončar, Dražen & Duić, Neven & Zeljko, Mladen & Lacal Arántegui, Roberto & Loisel, Rodica & Raguzin, Igor, 2013. "Analysis of financial mechanisms in support to new pumped hydropower storage projects in Croatia," Applied Energy, Elsevier, vol. 101(C), pages 161-171.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Antweiler, Werner, 2021. "Microeconomic models of electricity storage: Price Forecasting, arbitrage limits, curtailment insurance, and transmission line utilization," Energy Economics, Elsevier, vol. 101(C).
    2. Connolly, D. & Lund, H. & Finn, P. & Mathiesen, B.V. & Leahy, M., 2011. "Practical operation strategies for pumped hydroelectric energy storage (PHES) utilising electricity price arbitrage," Energy Policy, Elsevier, vol. 39(7), pages 4189-4196, July.
    3. McPherson, Madeleine & Johnson, Nils & Strubegger, Manfred, 2018. "The role of electricity storage and hydrogen technologies in enabling global low-carbon energy transitions," Applied Energy, Elsevier, vol. 216(C), pages 649-661.
    4. McPherson, Madeleine & Karney, Bryan, 2017. "A scenario based approach to designing electricity grids with high variable renewable energy penetrations in Ontario, Canada: Development and application of the SILVER model," Energy, Elsevier, vol. 138(C), pages 185-196.
    5. Blanco, Herib & Faaij, André, 2018. "A review at the role of storage in energy systems with a focus on Power to Gas and long-term storage," Renewable and Sustainable Energy Reviews, Elsevier, vol. 81(P1), pages 1049-1086.
    6. Díaz-González, Francisco & Sumper, Andreas & Gomis-Bellmunt, Oriol & Villafáfila-Robles, Roberto, 2012. "A review of energy storage technologies for wind power applications," Renewable and Sustainable Energy Reviews, Elsevier, vol. 16(4), pages 2154-2171.
    7. Núñez, Fernando & Canca, David & Arcos-Vargas, Ángel, 2022. "An assessment of European electricity arbitrage using storage systems," Energy, Elsevier, vol. 242(C).
    8. McPherson, Madeleine & Ismail, Malik & Hoornweg, Daniel & Metcalfe, Murray, 2018. "Planning for variable renewable energy and electric vehicle integration under varying degrees of decentralization: A case study in Lusaka, Zambia," Energy, Elsevier, vol. 151(C), pages 332-346.
    9. Jeon, Wooyoung & Mo, Jung Youn, 2018. "The true economic value of supply-side energy storage in the smart grid environment – The case of Korea," Energy Policy, Elsevier, vol. 121(C), pages 101-111.
    10. Guittet, Mélanie & Capezzali, Massimiliano & Gaudard, Ludovic & Romerio, Franco & Vuille, François & Avellan, François, 2016. "Study of the drivers and asset management of pumped-storage power plants historical and geographical perspective," Energy, Elsevier, vol. 111(C), pages 560-579.
    11. Arcos-Vargas, Ángel & Canca, David & Núñez, Fernando, 2020. "Impact of battery technological progress on electricity arbitrage: An application to the Iberian market," Applied Energy, Elsevier, vol. 260(C).
    12. Lund, Peter D. & Lindgren, Juuso & Mikkola, Jani & Salpakari, Jyri, 2015. "Review of energy system flexibility measures to enable high levels of variable renewable electricity," Renewable and Sustainable Energy Reviews, Elsevier, vol. 45(C), pages 785-807.
    13. Zakeri, Behnam & Syri, Sanna, 2015. "Electrical energy storage systems: A comparative life cycle cost analysis," Renewable and Sustainable Energy Reviews, Elsevier, vol. 42(C), pages 569-596.
    14. McConnell, Dylan & Forcey, Tim & Sandiford, Mike, 2015. "Estimating the value of electricity storage in an energy-only wholesale market," Applied Energy, Elsevier, vol. 159(C), pages 422-432.
    15. Haas, Jannik & Prieto-Miranda, Luis & Ghorbani, Narges & Breyer, Christian, 2022. "Revisiting the potential of pumped-hydro energy storage: A method to detect economically attractive sites," Renewable Energy, Elsevier, vol. 181(C), pages 182-193.
    16. Foley, A.M. & Leahy, P.G. & Li, K. & McKeogh, E.J. & Morrison, A.P., 2015. "A long-term analysis of pumped hydro storage to firm wind power," Applied Energy, Elsevier, vol. 137(C), pages 638-648.
    17. Emmanouil, Stergios & Nikolopoulos, Efthymios I. & François, Baptiste & Brown, Casey & Anagnostou, Emmanouil N., 2021. "Evaluating existing water supply reservoirs as small-scale pumped hydroelectric storage options – A case study in Connecticut," Energy, Elsevier, vol. 226(C).
    18. Erren Yao & Huanran Wang & Long Liu & Guang Xi, 2014. "A Novel Constant-Pressure Pumped Hydro Combined with Compressed Air Energy Storage System," Energies, MDPI, vol. 8(1), pages 1-18, December.
    19. Haas, J. & Cebulla, F. & Cao, K. & Nowak, W. & Palma-Behnke, R. & Rahmann, C. & Mancarella, P., 2017. "Challenges and trends of energy storage expansion planning for flexibility provision in low-carbon power systems – a review," Renewable and Sustainable Energy Reviews, Elsevier, vol. 80(C), pages 603-619.
    20. Kondziella, Hendrik & Bruckner, Thomas, 2016. "Flexibility requirements of renewable energy based electricity systems – a review of research results and methodologies," Renewable and Sustainable Energy Reviews, Elsevier, vol. 53(C), pages 10-22.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:energy:v:145:y:2018:i:c:p:856-870. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.journals.elsevier.com/energy .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.