Valuation of energy storage in energy and regulation markets

The recent trend in high penetration of renewable energy will lead to a significant mix of renewable technologies in the future power industry portfolio. One important inconvenience of these technologies is their intermittency of power generation. This variability of energy production leads to an increased need of services such as reliability, regulation and transmission congestion. In order to make the electric grid reliable and efficient, system operators have to deploy cost-effective ways to balance supply and demand in real time. Energy storage is considered a viable solution and can mitigate several problems. However, it is still unclear whether or not energy storage will generate enough profit by interacting with energy and ancillary markets. Current economic studies on the energy storage technologies are limited because they do not explore possibilities of using storage in arbitrage and ancillary services in both day-ahead and real time markets. This paper focuses on the economics of energy storage participating in arbitrage and regulation services within different markets. A case study on gravity storage system is used to verify the effectiveness of the proposed operation optimization model. Finally, this paper discusses the value of storage in various grid applications.