• Non ci sono risultati.

Analysing the potential economic value of energy storage

N/A
N/A
Protected

Academic year: 2021

Condividi "Analysing the potential economic value of energy storage"

Copied!
22
0
0

Testo completo

(1)

101

Analyzing the Potential Economic Value of Energy Storage

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

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 GD\DKHDGJHQHUDWHVSUR¿WVLQWKH%ULWLVKFRQWH[W7KHSDSHUVHWVRXWWKHSRWHQWLDO problems as the market moves to absorb increasing amounts of wind, then char-acterises 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 RYHUDUHODWLYHO\IHZKRXUV,WDUJXHVWKDWDGGLWLRQDOLQFHQWLYHVPD\QHHGWREHSXW into place in order to render storage over relatively longer periods more attractive DQGWRGHOLYHUEURDGHUVRFLDOEHQH¿WVZKLFKDUHXQOLNHO\WREHJHQHUDWHGDQGFDS-WXUHGDVDUHVXOWRISXUHO\FRPPHUFLDOFRQVLGHUDWLRQV

Keywords: Arbitrage; electricity markets; energy storage; market clearing; price IRUHFDVWLQJ

KWWSVGRLRUJ6,PJLX 1. INTRODUCTION

*ULGVFDOH HOHFWULFLW\ KDV WZR FKDUDFWHULVWLFV WKDW GLVWLQJXLVK LW IURP HYHU\ RWKHU JRRG 6XSSO\QHHGVWRHTXDOGHPDQGDWHYHU\SRLQWLQWLPHWRWKHVHFRQGRUWKHV\VWHPEUHDNVGRZQ<HW VXSSO\DQGGHPDQGQDWXUDOO\ÀXFWXDWHRYHUWLPH6WRUDJHWRPHHWWKHVHÀXFWXDWLRQVWDNHVSODFHYLD the conversion from other forms of energy, for example via combustion, or conversion of electrical energy into other forms of energy, for example from chemical energy in batteries, or releasing po-WHQWLDOHQHUJ\LQWKHFDVHRISUHYLRXVO\SXPSHGK\GURHOHFWULFLW\,QWUDGLWLRQDOHOHFWULFLW\V\VWHPV development over time from local supply to national and even international supply systems has UHTXLUHGV\VWHPLQWHUFRQQHFWLRQZKLFKWDNHVDGYDQWDJHRIOHVVWKDQSHUIHFWFRUUHODWLRQLQGHPDQG DFURVVVSDFHDORQJVLGHSUHFLVHPRQLWRULQJDQGRSHUDWLRQRIÀH[LEOHJHQHUDWLQJSODQW0RVWRIWKH burden of storage historically has taken place at the input level, via storage of coal, natural gas and, WRDOHVVHUH[WHQWIXHORLO7KLVDSSURDFKWRVWRUDJHLVKRZHYHUFKDOOHQJHGE\WKHLQFUHDVLQJFRQWUL-EXWLRQRIHQHUJ\IURPUHQHZDEOHVRXUFHVLQPRGHUQHQHUJ\V\VWHPV

The process of substituting renewable generating sources for fossil fuels in order to reduce FDUERQHPLVVLRQVKDVOHGWRQHZDQGVXEVWDQWLDOFKDOOHQJHVWRWKHHOHFWULFDOV\VWHPVRIDOOFRXQWULHV  &RUUHVSRQGLQJDXWKRU6FKRRORI%XVLQHVVDQG(FRQRPLFV/RXJKERURXJK8QLYHUVLW\/(788.(PDLO 0*LXOLHWWL#OERURDFXN  'HSDUWPHQWRI(FRQRPLFV8QLYHUVLW\RI9HURQD9HURQD,WDO\(PDLO/XLJL*URVVL#XQLYULW:  8QLYHUVLW\RI%DUFHORQDDQG&KDLURI(QHUJ\6XVWDLQDELOLW\%DUFHORQD,QVWLWXWHRI(FRQRPLFV%DUFHORQD 6SDLQ(PDLO(OLVD7UXMLOOR#XEHGX 'HSDUWPHQWRI(FRQRPLFV8QLYHUVLW\RI:DUZLFN&RYHQWU\&9$/8.(PDLO0LFKDHOZDWHUVRQ#ZDUZLFN DFXN:

The Energy Journal9RO6,7KLVLVDQRSHQDFFHVVDUWLFOHXQGHUWKHWHUPVRIWKH&UHDWLYH&RPPRQV$WWULEXWLRQ

/LFHQVH &&%< ZKLFKSHUPLWVXVHGLVWULEXWLRQDQGUHSURGXFWLRQLQDQ\PHGLXPSURYLGHGWKHRULJLQDOZRUNLVSURSHUO\ FLWHG

(2)

The Energy Journal

7KHVHDUHQRWZLGHO\DSSUHFLDWHGE\WKHJUHHQOREE\WKHSXEOLFPRUHJHQHUDOO\RUHFRQRPLVWV1<HW

they are of vital importance to the maintenance of readily available electricity supply which is a FRUQHUVWRQHRIHFRQRPLFDFWLYLW\DVZHNQRZLW0RVWUHQHZDEOHUHVRXUFHVIRUH[DPSOHZLQGDQG VRODUSRZHUDUHLQWHUPLWWHQWUDWKHUWKDQ¿UPDQGDUHQRWELGGDEOHLQUHVSRQVHWRSULFH(QKDQFHG LQWHUFRQQHFWLRQSURYLGHVDSDUWLDOVROXWLRQDVGRGHPDQGPDQDJHPHQWDQGVWRUDJH7KHWUDGLWLRQDO PHWKRGRIVWRUDJHLVYLDSXPSHGK\GURIDFLOLWLHVEXWWKHVHUHTXLUHJHRORJLFDOIHDWXUHVWKDWDUHQRW HDVLO\UHSOLFDWHG7KXVDOWHUQDWLYHDSSURDFKHVWKDWDUHVFDODEOHLQYROYLQJFRPSUHVVHGDLUKHDWRU EDWWHU\VWRUDJHKDYHEHHQUDLVHGDVSRVVLEOHVROXWLRQV 7KHPDLQSXUSRVHRIRXUSDSHULVWRH[DPLQHZKHWKHUWKHUHDUHVX൶FLHQWHFRQRPLFLQFHQ-WLYHVLQSODFHIRUVXFKVWRUDJHWRRSHUDWHSUR¿WDEO\E\H[SORLWLQJLQWUDGD\DUELWUDJHRSSRUWXQLWLHV LQWKH%ULWLVKZKROHVDOHPDUNHW*LYHQWKHUHODWLYHO\VPDOOVL]HRIH[LVWLQJVWRUDJHIDFLOLWLHVLQ*UHDW %ULWDLQFRPSDUHGWRWKHVL]HRIWKHHOHFWULFLW\V\VWHPLWZRXOGEHXQUHDOLVWLFWRSUHVXPHWKDWVWRUDJH IDFLOLWLHVFXUUHQWO\RSHUDWLQJLQWKHZKROHVDOHPDUNHWZRXOGEHDEOHWRD൵HFWWKHPDUNHWSULFHPXFK VHH5HQHZDEOH(QHUJ\$VVRFLDWLRQ )RUWKLVUHDVRQWKHSDSHUIRFXVHVRQWKHLGHQWL¿FDWLRQ RIDQRSWLPDOLQWUDGD\VWUDWHJ\IRURSHUDWLQJDSULFHWDNLQJVWRUDJHIDFLOLW\ 6HYHUDOFRQWULEXWLRQVLQWKHOLWHUDWXUHRQHQHUJ\WHFKQRORJLHVKDYHFRQVLGHUHGWKHLVVXH of energy storage within a broadly economic framework, commonly with a particular institutional EDFNJURXQGLQPLQG([DPSOHVZKLFKUHO\RQDQH[SOLFLWO\HFRQRPLFIUDPHZRUNLQFOXGH:DODZDONDU HWDO  6LRVKDQVLHWDO  6LRVKDQVL  &DUVRQDQG1RYDQ  DQG%UDGEXU\HW DO  ZKRDWWHPSWWRDVVHVVSULYDWHDQGVRFLDOEHQH¿WVIURPVWRUDJHLQWKH86FRQWH[WZKLOH =D¿UDNLVHWDO  LQYHVWLJDWHDUELWUDJHRSSRUWXQLWLHVLQ(XURSHDQPDUNHWV7KHVHSDSHUVDGGUHVV a range of issues, but one of the key aims is to analyse the impact of storage on prices; another is to HYDOXDWHWKHSUR¿WDELOLW\RIVWRUDJH5HFHQWFRQWULEXWLRQVZKLFKKDYHIRFXVVHGRQWKHSUR¿WDELOLW\RI ODUJH±VFDOHVWRUDJHIDFLOLWLHVLQFOXGH%DUEU\HWDO  &UXLVHHWDO  DQG1DVURODKSRXUHW DO  7KHVHVWXGLHVLQYHVWLJDWHWKHVWUDWHJLFFKRLFHVDYDLODEOHWRVWRUDJHRSHUDWRUVZKRDUHDEOH WRD൵HFWWKHZKROHVDOHPDUNHWSULFHDVDUHVXOWRIWKHODUJHVL]HRIWKHLUIDFLOLWLHV2XUZRUNIRFXVHV instead on price-taking facilities, a more realistic assumption in countries where storage activities DUHDWDUHODWLYHO\HDUO\VWDJHRIGHYHORSPHQWDQGVXEMHFWWRUHJXODWRU\XQFHUWDLQW\DVLQWKH8.

There are broadly two economic approaches that can be taken in evaluating the optimal OHYHORIVWRUDJHLQDQHOHFWULFDOQHWZRUN LQSDUWLFXODULQWKHFRQWH[WRIVLJQL¿FDQWLQWHUPLWWHQWJHQHU-DWLRQ 2QHLVWRHYDOXDWHWKHVRFLDOEHQH¿WVDQGFRVWVRIVWRUDJHWKHRWKHULVWRH[DPLQHWKHSULYDWH EHQH¿WVDQGFRVWVRILWVRSHUDWLRQ6WRUDJHDFWLYLWLHVZKLFKIDFLOLWDWHWKHEDODQFLQJRIVXSSO\DQG demand in energy system with high penetration of non-biddable generation produce a range of so-FLDOEHQH¿WVZKLFKFRXOGLQFOXGH •ഩ6DYLQJRQWKHFDSLWDOH[SHQGLWXUHUHTXLUHGWRLQVWDOOSHDNLQJSODQWV DOWKRXJKWKHVHFRVWV VKRXOGEHFRPSDUHGWRWKHFDSLWDOFRVWVIRUWKHFRQVWUXFWLRQRIVWRUDJHIDFLOLWLHV  •ഩ5HGXFHGH[SHQGLWXUHRQWUDQVPLVVLRQDQGGLVWULEXWLRQJULGUHLQIRUFHPHQW •ഩ$YRLGLQJFXUWDLOPHQWRIRXWSXWIURPUHQHZDEOHHQHUJ\JHQHUDWLRQ •ഩ)XHOVDYHGWKURXJKUHGXFHGUDPSUDWHV •ഩ5HGXFHGQHHGIRUORZH൶FLHQF\SODQWVWRRSHUDWH +RZHYHUQRWDOOWKHVHSRWHQWLDOEHQH¿WVFDQEHFDSWXUHGE\DUELWUDJHRUWKURXJKWKHSUR-YLVLRQRIDQFLOODU\VHUYLFHVRQWKHEDVLVRIFRQWUDFWXDODUUDQJHPHQWVVLQFHWKHEHQH¿WVDULVLQJIURP  7KLVLVSDUWO\EHFDXVHHQJLQHHUV LQLWLDOO\ DQGHFRQRPLVWVKDYHEHHQVRVXFFHVVIXOLQGHYLVLQJV\VWHPVWRGHDOZLWKWKH SUREOHPVPHDQLQJEODFNRXWVDUHUHODWLYHO\UDUH+RZHYHUZHDOVRNQRZWKDWRQFHDZLGHVSUHDGEODFNRXWRFFXUVUHWULHYLQJ WKHV\VWHPSURYHVWLPHFRQVXPLQJDQGGL൶FXOW

(3)

Analyzing the Potential Economic Value of Energy Storage 

WKHVHVHUYLFHVDUHVSUHDGZLGHO\DFURVVGL൵HUHQWLQGXVWULDOSDUWLFLSDQWVZLWKOLPLWHGDELOLW\WRDS-SURSULDWHWKHIXOOUHQWIURPWKHVRFLDOO\EHQH¿FLDODFWLYLWLHVWKH\XQGHUWDNH0RUHVXFFLQFWO\WKHUH is a missing market problemGXHWRXQFDSWXUHGSRVLWLYHH[WHUQDOLWLHVIURPVWRUDJHDFWLYLWLHV$WWKH

same time, some of the balancing activities potentially undertaken by storage facilities represent a form of business stealing as they would replace activities previously undertaken, and rents previ-RXVO\FDSWXUHGE\KLJKFRVWSHDNLQJSODQWV

7KHDSSURDFKZHWDNHKHUHLVWRIRFXVRQWKHSULYDWHRQJRLQJEHQH¿WVDQGFRVWVRQWKHDV-VXPSWLRQWKDWVWRUDJHZLOOEHRSHUDWHGFRPPHUFLDOO\,QWKHORQJHUWHUPDVFRQYHQWLRQDOJHQHUDWLRQ and distribution resources are retired or replaced, broader considerations come into play, but we do QRWGLVFXVVWKHVHKHUH1HYHUWKHOHVVLPSOLFLWO\ZHDUHFRQVLGHULQJVWRUHVFDSDEOHRIKROGLQJKRXUV¶ UDWKHUWKDQPLQXWHV¶ZRUWKRISRZHU0RUHSUHFLVHO\RXUVLPXODWLRQUHVXOWVDUHEDVHGRQWHFKQLFDO SDUDPHWHUVDQGRSHUDWLQJFRVWVDVVRFLDWHGZLWK&RPSUHVVHG$LU(QHUJ\6WRUDJH &$(6 WHFKQRO-RJ\DVSXEOLVKHGLQ/XQGHWDO  DQGRQWKHSODQWDQGSXPSVL]HRIWKH+XQWKRUI&$(6SODQW LQ*HUPDQ\WKLV¿UVW&$(6SODQWLQWKHZRUOGDQGWKHRQO\RQHFXUUHQWO\RSHUDWLQJLQ(XURSH :HWDNHDQRSWLPLVWLFVWDQFHWRH[DPLQLQJWKHFRPPHUFLDOEHQH¿WVRIVWRUDJH$OOZHDVN LVZKHWKHUWKH¿UVWFRPPHUFLDOO\RSHUDWHGVWRUHWRHQWHUWKHPDUNHWRSHUDWLQJWKURXJKDUELWUDJH more than meets its running costs, ignoring the costs of construction, which will be site and technol-RJ\VSHFL¿FDQGPD\TXDOLI\IRUVXEVLG\,QGHHGWKHFRVWHVWLPDWHVIRUSRZHUDQGFDSDFLW\UHODWHG FRVWVIRU&$(6WHFKQRORJ\YDU\ZLGHO\GHSHQGLQJRQWHFKQLFDOFKDUDFWHULVWLFV HJDGLDEDWLFRU QRQDGLDEDWLF RIWKHSODQWORFDWLRQDQGFRQGLWLRQVRIWKHFDYHXVHGIRUVWRULQJFRPSUHVVHGDLU %HFDXVHWKHVWRUHZHFRQVLGHULVWRRVPDOOWRLQÀXHQFHSULFHVRUJHQHUDWRUVZHWDNHH[LVWLQJPDUNHW SULFHVDVDJRRGUHSUHVHQWDWLRQRIZKDWWKHVWRUHZLOOIDFH,QSUDFWLFHWKH¿UVWVWRUHPD\EHIROORZHG E\RWKHUVVWRUHVPD\LQWHUDFWWRUHGXFHUHWXUQVIRURWKHUVWRUHVGXHWRWKHH൵HFWVRQSULFHVJHQHUD-WRUVPD\PRGLI\WKHLUVWUDWHJLHVLQUHVSRQVHWRWKHLQWURGXFWLRQRIVWRUHVHWF VHH+XWFKLQVRQ FKDSWHUDQG&UXLVHHWDOIRUH[SORUDWLRQVRIWKLVLVVXH %XWLIWKH¿UVWVWRUHFDQQRWPHHWLWV UXQQLQJFRVWVWKHQVXFKVWRUDJHLVLQIHDVLEOHDVDFRPPHUFLDOWHFKQRORJ\RQWKHEDVLVRIDUELWUDJH %HVLGHVFRQVLGHUDWLRQVDERXWH[SHFWHGUHYHQXHVDQGUXQQLQJFRVWVWKHRSHUDWLRQRI¿UVWVWRUHZLOO DOVREHD൵HFWHGE\ULVNDVVHVVPHQWFRQVLGHUDWLRQVDVZHGLVFXVVLQUHODWLRQWRRXUVLPXODWLRQVUH-VXOWV7KHUHDUHRWKHUSRWHQWLDOUHYHQXHVWUHDPVDVZHOODVDUELWUDJHDVZHGLVFXVVODWHUEXWQRQH FOHDUO\DYDLODEOHIRUVWRUDJHDWSUHVHQW 7KHTXHVWLRQVZHH[DPLQHDUH L ZKHWKHUWKHUHLVDFOHDUUHTXLUHPHQWIRUVWRUDJH LL ZKDW ZLOOEHWKHIRFXVRIFRPPHUFLDOO\SURYLGHGVWRUDJHDQG LLL ZKHWKHUWKLVIRFXVDSSHDUVVX൶FLHQWWR WDFNOHWKHLVVXHVWKHV\VWHPIDFHV2XUSODQLQWKLVSDSHULVWRH[SODLQWKHUHTXLUHPHQWWKURXJKFRQ-VLGHULQJEULHÀ\WKHFKDUDFWHULVWLFVRIZLQGSRZHUWKHSULPHVRXUFHRIUHQHZDEOHHQHUJ\LQ%ULWDLQ :HH[SODLQZK\LQWHUFRQQHFWLRQDQGGHPDQGPDQDJHPHQWDVFXUUHQWO\RSHUDWHGDQGSODQQHGDUH  1HZEHU\  GLVFXVVHV³PLVVLQJPDUNHW´LVVXHVLQWKHFRQWH[WRIWKHZKROHVDOHHOHFWULFLW\PDUNHWVE\H[SODLQLQJ WKDWµLQYHVWRUVQHHGFRQ¿GHQFHWKDWWKHUHYHQXHWKH\HDUQIURPWKHHQHUJ\PDUNHWV « ZLOOEHDGHTXDWHWRFRYHULQYHVWPHQW DQGRSHUDWLQJFRVWV,IWKLVUHYHQXHLV « SRWHQWLDOO\DGHTXDWHEXWQRWSHUFHLYHGWREHVRE\JHQHUDWLRQFRPSDQLHVRUWKHLU ¿QDQFLHUVWKHQWKHUHLVD³PLVVLQJPDUNHW´SUREOHP¶  $QLQWHUHVWLQJDQGFDUHIXODQDO\VLVWKDWEHDUVXSRQWKHVRFLDOLPSDFWRIVWRUDJHLV*RZULVDQNDUDQHWDO  RQWKH VRFLDOLPSDFWRIVRODUSRZHUDWYDULRXVOHYHOVLQWKH7XFVRQ$UL]RQDGLVWULFW+RZHYHUWKLVGRHVQRWH[SOLFLWO\FRQVLGHUVWRU-DJHLQFOXGLQJLW ³SHUIHFWVWRUDJH´ RQO\YLDWKHEHQH¿FLDOLPSDFWRQVPRRWKLQJRXWSXWRIVRODUSRZHU  3RZHUUHODWHGFRVWVKDYHEHHQHVWLPDWHGWREHLQWKHDUHDRI±N:DQGFDSDFLW\UHODWHGRQHVEHWZHHQDQG .:K LQ86GROODUVWHUPV E\(&2)<6  IRUWKHFDVHRIXQGHUJURXQG&$(6WHFKQRORJ\$SUHYLRXVUHSRUW E\6WHZDUWHWDO  DOVRFRQWDLQVZLGHUDQJLQJHVWLPDWHVIRUFDSDFLW\UHODWHGFRVWVEHWZHHQDQG0:K7KHVH ZRXOGQHHGWREHFRPSDUHGZLWKRXUHVWLPDWHGSUR¿WVRIDERXW.:K\HDUO\SUR¿WVLQGROODUVFRQVLVWHQWZLWKWKH EDVLVRIWKH(&2)<6¿JXUHV

(4)

The Energy Journal DOLPLWHGVROXWLRQ:HWKHQPRYHRQWRH[DPLQLQJWKHFKDUDFWHULVWLFVRISULFHVZKLFKGHWHUPLQHWKH QDWXUHRIOLNHO\DUELWUDJHDFWLYLW\VRLQWXUQWKHOLNHO\FKDUDFWHULVWLFVRIDVWRUH6WRUHVRIGL൵HUHQW H൶FLHQFLHVDQGVL]HVDUHGLVFXVVHG)LQDOO\ZHPRYHRQWRFRQVLGHULQJZKHWKHUIRUHVHHDEOHIXWXUH FKDQJHVLQWKHPDUNHWZLOOKDYHDQLQÀXHQFH ,QRUGHUWRSURYLGHHYLGHQFHDERXWWKHUHODWLYHO\QRYHODQGXQGHUUHVHDUFKHGLVVXHVGLV-FXVVHG DERYH LW LV QHFHVVDU\ WR UHO\ RQ D UDQJH RI GL൵HUHQW VRXUFHV RI GDWD ZLWK GL൵HUHQW WLPH OHQJWKV7KHDQDO\VLVRIDUELWUDJHRSSRUWXQLWLHVIRUDµJHQHULF¶VWRUDJHIDFLOLW\ GLVFXVVHGLQ6HFWLRQ  UHTXLUHVKLVWRULFDOGDWDRYHUDUHDVRQDEO\ORQJSHULRGRIWLPHLQRUGHUWRVHHKRZZHOOSULFHVFDQ EHSUHGLFWHGDQGXVHGH൵HFWLYHO\IRUWKHGHYHORSPHQWRIDQRSWLPDOVWUDWHJ\WRRSHUDWHWKHVWRUDJH IDFLOLW\SUR¿WDEO\2QWKHRWKHUKDQGWKHLQYHVWLJDWLRQDERXWWKHDELOLW\WRXVHZHDWKHUIRUHFDVWVDW GL൵HUHQWKRUL]RQVWRSUHGLFWWKHH[SHFWHGZLQGRXWSXWDQGLWVLPSDFWRQSULFHV GLVFXVVHGLQ6HFWLRQ  UHTXLUHVWKHXVHRIGDWDRQDFWXDODQGIRUHFDVWZLQGRXWSXWVZKLFKLVREWDLQHGIURPGL൵HUHQW VRXUFHVIURPWKHSULFHGDWDDQGLVRQO\DYDLODEOHIRUDPRUHUHFHQWSHULRGRIWLPH VWDUWLQJLQ1R-YHPEHU 

2. THE REQUIREMENT FOR STORAGE

6WRUDJHLVGHVLUDEOHLI D WKHUHLVVLJQL¿FDQWYDULDELOLW\LQWKHVRXUFHRISRZHUZKLFKUH- TXLUHVVRPHWDLORULQJWRFRQIRUPWRWKHGHVLUHGSUR¿OHRISRZHUGHPDQGDQG E DOWHUQDWLYHDS-SURDFKHV DUH LQVX൶FLHQW RU LQVX൶FLHQWO\ FRPSHWLWLYH  WR VDWLVI\ WKLV WDLORULQJ UHTXLUHPHQW :H DUJXHWKDWERWKWKHVHFRQGLWLRQVDUHVDWLV¿HGLQWKHFDVHRI%ULWDLQ

:LQG SRZHU KDV LPSRUWDQW FKDUDFWHULVWLFV WKDW SURYLGH FKDOOHQJHV WR PRGHUQ HOHFWULFDO SRZHUV\VWHPV,WLVQDWXUDOO\XQELGGDEOHLWLVH[WUHPHO\YDULDEOHLWVYDULDELOLW\LVWLPHFRUUHODWHG DQGLWLVGL൶FXOWWRIRUHFDVWEH\RQGDVKRUWSHULRG)LJXUHEHORZLOOXVWUDWHVWKHVHIHDWXUHVIRU*UHDW %ULWDLQIRFXVLQJRQWKH\HDUZKLFKZLOOEHXVHGLQRXUUHJUHVVLRQDQDO\VLVDQGGLVFXVVHGLQ VHFWLRQ0HDQJHQHUDWLRQLQZDV0:ZLWKDODUJHVWDQGDUGGHYLDWLRQRI$WWLPHV YLUWXDOO\QRWKLQJLVJHQHUDWHGDFURVVWKHZKROHRI*UHDW%ULWDLQDWRWKHUWLPHVDOPRVW*: PD[-LPXPZLQGJHQHUDWLRQLQZDV0: RURYHURIDYHUDJHORDGLVJHQHUDWHGXVLQJ ZLQGDQGJLYHQFXUUHQWGHYHORSPHQWVWKLVZLOOLQFUHDVHVLJQL¿FDQWO\

There are periods within our data sample when one or the other happens for hours at a time, IRUH[DPSOHLQIRURIWKHWLPHJHQHUDWLRQLVEHORZ*:DVLOOXVWUDWHGLQ)LJXUH 7LPHFRUUHODWLRQLVQRWHDVLO\VHHQLQWKH¿JXUHEXWLQWKHUHZHUHRFFDVLRQVRQZKLFKZLQG JHQHUDWLRQZDVOHVVWKDQ*:IRUPRUHWKDQKRXUV7KHORQJHVWVXFKSHULRGZDVKRXUVLHLW FRYHUHGMXVWRYHUGD\VZKLOHDFURVVWKHZKROHVDPSOHWKHPD[LPXPSHULRGZLWKZLQGJHQHUDWLRQ EHORZ*:ODVWHGRYHUDZHHN OXFNLO\LQ-XQH :HDOVRVHHWKDWWKHGD\DKHDGIRUHFDVWSORWWHGLQ WKLVJUDSKLVKLJKO\FRUUHODWHGZLWKWKHDFWXDOYDOXHWKRXJKLWRYHUSUHGLFWVVLJQL¿FDQWO\E\RYHU  RQ DYHUDJH 0RUHRYHU RQFH ZH PRYH EH\RQG D FRXSOH RI GD\V DKHDG SUHGLFWLRQV EHFRPH H[WUHPHO\YDJXH WKHGL൵HUHQFHVEHWZHHQDFWXDODQGSUHGLFWHGYDOXHVDUHYHU\ZLGH  This leads to

SRWHQWLDOSUREOHPVIRUORQJWHUPVWRUDJH

Demand management, for example through real-time pricing, has potential, but naturally cannot tackle the problem that consumers want the lights on when it is dark, more than when the VXQLVVKLQLQJDQGJHQHUDWLQJVRODUHOHFWULFLW\'HPDQGPDQDJHPHQWVKDGHVLQWRVWRUDJHEHFDXVH

 7KLVLVDQLQIHUHQFHLQWKHFDVHRI%ULWDLQ¿JXUHVIRU%HOJLXPZKLFKDOVRKDVDVXEVWDQWLDOSURSRUWLRQRILWVZLQG IDUPVR൵VKRUHVXJJHVWWKDWSUHGLFWLRQVIRU¿YHWRVHYHQGD\VDUHUDWKHUXQLQIRUPDWLYH7KHSUREOHPLVLQKHUHQWO\GL൶FXOW VLQFHZLQGIRUHFDVWVWKHPVHOYHVDUHVXEMHFWWRLQFUHDVLQJHUURUVWKHIXUWKHUDKHDGWKH\DUHPDGHDQGSRZHUJHQHUDWLRQLV QRQOLQHDUO\UHODWHGWRZLQGVSHHGEXWLV]HUREHORZRUDERYHFULWLFDOVSHHGV

(5)

Analyzing the Potential Economic Value of Energy Storage 

VWRUDJHFDQEHLPSOHPHQWHGDVHLWKHUDUHVSRQVHIURPXVHUVRUDQDFWLRQWDNHQE\VXSSOLHUV2QWKH SDUWRIXVHUVLPPHUVLRQZDWHUKHDWHUVFRXOG DQGVRPHGRDOUHDG\ KHDWZDWHURQO\ZKHQHOHFWULFLW\ is cheap, and those consumers with electrically-powered cars could charge up when electricity is FKHDSDQGVXSSO\EDFNWRWKHJULGZKHQLWLVH[SHQVLYH7KHVHLQFHQWLYHVDUHVLPLODUWRWKRVHLQ-YROYHGLQJULGVFDOHVWRUDJHVRDOWKRXJKZHIRFXVRQWKHODWWHUZLWKVRPHPRGL¿FDWLRQRXUDQDO\VLV FDQWDNHDFFRXQWRIPRUHFRQVXPHUEDVHGUHVSRQVHLQDGGLWLRQ ,QWHUFRQQHFWRUVUHVSRQGWRVSDWLDOGL൵HUHQFHVUHVXOWLQJIURPGL൵HUHQWH[LVWLQJJHQHUDWLRQ IDFLOLWLHVDQGGL൵HUHQWFRQVXPHUKDELWVDFURVVVSDFH7KHVHRSHUDWLRQVPDNHLWSRVVLEOHIRULQWHU-FRQQHFWRUVWRREWDLQUHYHQXHVH[FOXVLYHO\WKURXJKSULFHDUELWUDJH%\FRQWUDVWVWRUDJHFDQUHVSRQG WRLQWHUWHPSRUDOGL൵HUHQFHVLQORDGVUHVXOWLQJIURPKDELWVDFURVVWLPH VXFKDVDFURVVKRXUVRIWKH GD\ ZKLFKDUHVXEVWDQWLDODQGVRPHWKLQJRILQFUHDVLQJLPSRUWDQFHGL൵HUHQFHVLQVXSSO\DYDLODELO-LW\IURPUHQHZDEOHJHQHUDWLRQ&RQVXPSWLRQLVLQGHHGLPSHUIHFWO\FRUUHODWHGDFURVVFRXQWULHVEXW WKHUHDUHPDQ\KRXUVLQWKHHYHQLQJZKHQWKHOLJKWVDUHRQDOORYHU:HVWHUQ(XURSHDQGPDQ\KRXUV LQWKHGD\LQZKLFKDOOVKRSVR൶FHVDQGIDFWRULHVDUHRSHUDWLQJ7KHUHLVVXEVWDQWLDOLQWHUFRQQHFWLRQ DOUHDG\EHWZHHQWKHHOHFWULFDOV\VWHPVRIFRQWLQHQWDO(XURSHDQFRXQWULHV7KLVDVVLVWVLQVPRRWKLQJ QHWORDGVDFURVVFRXQWULHVVRWKDWIRUH[DPSOH)UDQFHZLWKLWVODUJHDQGUHODWLYHO\LQÀH[LEOHQXFOHDU ÀHHWFDQLPSRUWHOHFWULFLW\ZKHQGRPHVWLFGHPDQGLVKLJKHVWDQGH[SRUWZKHQLWLVORZHVW0RVW VXFKLQWHUFRQQHFWRUVDUHOLPLWHGLQFDSDFLW\PDQLIHVWLQJLQFRQWLQXLQJSULFHGL൵HUHQFHVDFURVVERU-GHUV 'XHWRLWVLVODQGQDWXUH%ULWDLQLVOHVVFRQQHFWHGHOHFWULFDOO\ZLWKRWKHUFRXQWULHVWKDQLV W\SLFDOIRU:HVW(XURSHDQFRXQWULHV1HYHUWKHOHVV%ULWDLQKDVLQWHUFRQQHFWLRQZLWK)UDQFHDQGWKH 1HWKHUODQGV SOXVWZRZLWKWKHLVODQGRI,UHODQG DQGIXUWKHULQWHUFRQQHFWRUVDUHSODQQHGWKH¿UVW WZRRIZKLFKPD\FRPHRQVWUHDPLQ7KHVHIXQFWLRQDVFRPPHUFLDORSHUDWLRQVRQWKHEDVLV  0RUHVLJQL¿FDQWPRGL¿FDWLRQVWRWKHDQDO\VLVDUHUHTXLUHGWRLQFOXGHWKHH൵HFWRIHOHFWULFDOYHKLFOHUHVSRQVH  $VOLJKWFDYHDWLQWHUFRQQHFWLRQZLWK1RUZD\DOORZVVWRUDJHDFURVVWLPHVLQFHDGYDQWDJHFDQEHWDNHQRIWKHVXEVWDQ-WLDOSXPSHGK\GURHOHFWULFUHVHUYHVDYDLODEOHWKHUH

(6)

The Energy Journal RIDUELWUDJHRQSULFHVGXHWRGL൵HULQJPDUJLQDOJHQHUDWLRQDQGORDGEDODQFHVEHWZHHQ%ULWDLQDQG LWVQHDUFRQWLQHQWQHLJKERXUV7KDWLVWRWKHH[WHQWWRZKLFKGL൵HUHQWLQÀXHQFHVSOD\DSDUWLQGH-WHUPLQLQJSULFHVZLWKLQ%ULWDLQDQGLWVFRQQHFWHGFRXQWULHVWKHLQWHUFRQQHFWRUZLOORSHUDWHWRPRYH HOHFWULFLW\IURPWKHORZHUSULFHGFRXQWU\WRWKHKLJKHUSULFHG2IFRXUVHWKHVHLQWHUFRQQHFWRUVH[-SHULHQFHOLQHORVVHVDQGDOVRFRQYHUVLRQORVVHVVLQFHWKHUHLVDGRXEOHFRQYHUVLRQIURPSKDVH$& WR'& WRIDFLOLWDWHXQGHUVHD+9'&FDEOHWUDQVPLVVLRQ DQGEDFNDJDLQDWWKHRWKHUHQG+RZHYHU LQWRWDOVXFKORVVHVDPRXQWSUREDEO\WROHVVWKDQRIWKHSRZHUWUDQVPLWWHG The total capacity

RIWKH)UHQFK'XWFK1RUZHJLDQDQG%HOJLDQH[LVWLQJDQGSODQQHGLQWHUFRQQHFWRUVLVDURXQG*: 7KHUHIRUHHYHQLIDOODUHRSHUDWLQJDWIXOOSRWHQWLDOLQWR%ULWDLQWKH\DUHRQO\VX൶FLHQWWRWDFNOH FXUUHQWZLQGÀXFWXDWLRQVDQGDUHVRPHORQJZD\VKRUWRIEHLQJDEOHWRKDQGOHZLQGÀXFWXDWLRQV RQFHPHDQZLQGJHQHUDWLRQJHWVWRDURXQGRIWRWDOSRZHUJHQHUDWHG $WWKHVDPHWLPHWKHVWRUDJHUHTXLUHPHQWVLQDFRPSOHWHO\UHQHZDEOHV\VWHPRIRSHUDWLRQ DUHXQIHDVLEO\ODUJHIRUFRPPHUFLDORSHUDWLRQ7KLVLVZHOOLOOXVWUDWHGWKURXJKDUHFHQWSDSHU (VWH-EDQHWDO DOWKRXJKWKLVLVQRWWKHSRLQWWKHSDSHUPDNHV,WFDOFXODWHVWKHUHTXLUHGPDJQLWXGH RIVWRUDJHLQDUHQHZDEOHV\VWHPLQ-DSDQ ZLWKVRODUDWRIWKHWRWDOFDSDFLW\ DV7:K 0RUHRYHUDVLVFOHDUIURP)LJXUHLQ(VWHEDQHWDO¶VDUWLFOHIRUPXFKRIWKHWLPHWKLVVWRUDJH would be barely used; there is a long and almost continuous withdrawal from store in the period IURP-XO\WR6HSWHPEHU

Commercial stores of natural gas are able to operate on the basis of an annual withdrawal and charge cycle, but most of the variance in gas prices comes over the long term in an annual cycle, ZKHUHDVLQHOHFWULFLW\LWFRPHVRYHUH[WUHPHO\VKRUWLQWHUYDOVFRPPRQO\DGD\DVZHVKRZEHORZ 7KXVWKHUHDUHWZRGUDPDWLFGL൵HUHQFHVLQVWRUDJHDVEHWZHHQJDVDQGHOHFWULFLW\RQHEHLQJWKH QDWXUHRISULFHPRYHPHQWVRYHUWLPHWKHRWKHUWKHSK\VLFDOVSDFHUHTXLUHGIRUVWRUDJH5RXJKD GHSOHWHGJDV¿HOGLQWKH1RUWK6HDWKDWFRPSULVHV%ULWDLQ¶VPDLQVWRUHRIQDWXUDOJDVFRLQFLGHQWDOO\ KROGVXSWR7:KRIVWRUHGJDVZKLFKZRXOGDPRXQWWROHVVWKDQKDOIWKDWLQWHUPVRIJHQHUDWHG electrical power, but the energy content of compressed natural gas per cubic metre is much higher than in electricity storage media such as compressed air, so if used for compressed air storage it ZRXOGQRWDPRXQWWRDQ\ZKHUHQHDUWKHHTXLYDOHQWDPRXQWRIHOHFWULFLW\

,WLVOLNHO\WKDWERWKLQWHUFRQQHFWLRQDQGVWRUDJHZLOOFRH[LVWDVZHPRYHWRDVLJQL¿FDQWO\ less biddable system of generation, because solar power does not work in the evening in winter ZKHQGHPDQGLVKLJKHVWDQGZLQGSRZHULVLQKHUHQWO\LQWHUPLWWHQW0RUHRYHUPRWLYDWLQJDVWRUHWR RSHUDWHPD\EHDPRUHVWUDLJKWIRUZDUGPHDQVRIPRYLQJVXSSO\DQGGHPDQGLQWREDODQFH

3. ARBITRAGE AS THE FOCUS OF COMMERCIAL STORAGE

,QWKLVSDSHUZHFRQFHQWUDWHRQWKHFODVVLFIRFXVIRUHOHFWULFLW\VWRUDJHDUELWUDJH+HUH ZHVFRSHRXWWKHSRWHQWLDOIRUDGGLWLRQDOVWRUDJHLQWKH8.HQHUJ\V\VWHPE\DQDO\VLQJH[LVWLQJ SULFLQJSDWWHUQV6XEVHTXHQWO\ZHZLOOFRQVLGHUZKHWKHUWKHLQFHQWLYHVDUHOLNHO\WRFKDQJHLQWKH IRUHVHHDEOHIXWXUH

2QH RI WKH FKDUDFWHULVWLF IHDWXUHV RI ZKROHVDOH HOHFWULFLW\ SULFHV LV D FRQVLVWHQW JDS EH-WZHHQSULFHVGXULQJSHDNKRXUVDQGSULFHVLQWKHPLGGOHRIWKHQLJKW R൵SHDN DULVLQJEHFDXVHWKH  (QWULHVLQ:LNLSHGLDVXJJHVWORVVHVIURPPRGHUQ+9'&FRQYHUWHUVDUHDSSUR[LPDWHO\±DWHDFKHQGZKLOVWOLQH ORVVHVDUHDURXQGSHUNP 3DJHVRQ+9'&FRQYHUWHUVDQG+9'&DFFHVVHG   +HUHZHQRWHWKDWWKHLVODQGRI,UHODQGZKLFKDOUHDG\JHQHUDWHVRQDYHUDJHRILWVSRZHUIURPZLQGH[SHULHQFHV YHU\VLPLODUÀXFWXDWLRQVWRWKRVHH[KLELWHGLQ)LJXUH+HQFHLWLVXQOLNHO\WKDWWKHH[WHQWRIÀXFWXDWLRQLVUHGXFHGPXFKDV DUHVXOWRIDGHQVHUPHVKRIZLQGJHQHUDWRUVLQ%ULWDLQLQIXWXUH

(7)

Analyzing the Potential Economic Value of Energy Storage 

PDUJLQDOIXHOWHFKQRORJ\IRUJHQHUDWLQJDWSHDNKDVUHODWLYHO\KLJKPDUJLQDOFRVW7KLVSURYLGHVDQ RSSRUWXQLW\IRUHOHFWULFLW\VWRUDJHWRDFWDVDUELWUDJHEHWZHHQWKHVHSHULRGV2IFRXUVHVLQFHVWRUDJH LVOHVVWKDQH൶FLHQWWKHYDULDWLRQEHWZHHQSHULRGVQHHGVWREHODUJHHQRXJKWKDWLWPRUHWKDQ FRYHUVWKHORVVHVHQJHQGHUHGE\VWRULQJZKLFKYDU\ZLWKWKHVWRUDJHWHFKQRORJ\:KDWVFRSHLV there for arbitrage earnings to encourage operation of storage?

+HUHZHZRUNZLWK$3;PLGSULFHV RUPDUNHWLQGH[GDWDSULFHV REWDLQHGIURP(OH[RQ10 RYHUWKHIRXU\HDUSHULRG-DQXDU\WR'HFHPEHUWRSURYLGHDQVZHUV7KHVHSULFHVDUHXVHG E\(OH[RQWRFDOFXODWHWKHUHYHUVHSULFHIRUHDFKVHWWOHPHQWSHULRGDQGµUHÀHFWWKHSULFHRIZKROHVDOH HOHFWULFLW\LQWKHVKRUWWHUPPDUNHW¶ KWWSVZZZHOH[RQSRUWDOFRXNDUWLFOHYLHZ"FDFKHEXVW V-EZQGF\ 7KH\DUHFDOFXODWHGDVDZHLJKWHGDYHUDJHSULFHIRUDOOTXDOLI\LQJFRQWUDFWV11 )LJXUHLOOXVWUDWHVWKHSDWWHUQRIKDOIKRXUO\PDUNHWSULFHVRYHUWKHWKUHHPRQWKSHULRG IURP-DQXDU\WR0DUFK7KHJUDSKVKRZVWZRWKLQJVFOHDUO\)LUVWZKROHVDOHSULFHVÀXFWXDWH DJRRGGHDOIURPMXVWXQGHU…SHU0:KWRZHOODERYHWKHKLJKHVWUHWDLOSULFH6HFRQGWKHXQGHU-O\LQJSDWWHUQLVGLXUQDO7KLVVHFRQGSRLQWLVGHPRQVWUDWHGPRUHFOHDUO\WRJHWKHUZLWKDWKLUGPRUH VXEWOHSRLQWLQ)LJXUHZKLFKWDNHVDZHHN 0RQGD\WR6XQGD\ IURPWKHVHGDWDDQGH[DPLQHVLW LQPRUHGHWDLO+HUHZHVHHWKDWZLWKLQHDFKGD\LWLVRQO\DFRPSDUDWLYHO\IHZKRXUVIRUZKLFKWKH SULFHLVYHU\KLJKWKLVQRUPDOO\KDSSHQVDURXQGSPLQWKHHYHQLQJ7KHH൵HFWLVVOLJKWO\ORZHUHG DWWKHZHHNHQG7KHORZHVWSULFHVRFFXUDWGHDGRIQLJKWEHWZHHQDURXQGDQGDP%HWZHHQ  (OH[RQLVWKHEDODQFLQJDQGVHWWOHPHQWFRGHFRPSDQ\ZKLFKPDQDJHVHOHFWULFLW\WUDGLQJDUUDQJHPHQWVLQ(QJODQG DQG:DOHV KWWSVZZZHOH[RQFRXN   µ$TXDOLI\LQJFRQWUDFWPD\WDNHWKHIRUPRIDQ\RIWKH « UHOHYDQW(3(;3URGXFWVVSHFL¿FDOO\WUDGHGRQRUDIWHU WKHWKLUGFDOHQGDUGD\SULRUWR*DWH&ORVXUHIRUWKHUHOHYDQW6HWWOHPHQW3HULRG¶ VHH0DUNHW,QGH['H¿QLWLRQ6WDWHPHQWYHU-VLRQ$SSHQGL[KWWSVZZZHOH[RQFRXNZSFRQWHQWXSORDGV0,'6BYSGI   :HFKRVHDWKUHHPRQWKSHULRGVLPSO\WRIDFLOLWDWHWKHJUDSKLFDOSUHVHQWDWLRQRIWKHIHDWXUHV Figure 2: First three months of 2014

(8)

The Energy Journal 1RYHPEHUDQG1RYHPEHUWKHDYHUDJHSHDNSULFHZDV…SHU0:KWKHDYHUDJHR൵ SHDNSULFHZDV…SHU0:K7KLVLQÀXHQFHVWKHZKROHVWUDWHJ\WKDWDQDUELWUDJLQJVWRUHZRXOG QHHGWRIROORZ ,QRUGHUWRPDNHPRQH\VLPSO\EX\LQJR൵SHDNDQGVHOOLQJSHDNDVWRUHZRXOGQHHGWR EHDWOHDVWH൶FLHQW(DUO\H[SHULPHQWVRYHUDSHULRGRIVHYHUDO\HDUVWKDWZHKDYHSHUIRUPHG LQYROYLQJDULVNIUHHVWUDWHJ\RIEX\LQJR൵SHDN RUEDVHORDG DQGVHOOLQJDWSHDNLQDIRUZDUGPDU-NHW GD\ZHHNPRQWKDKHDG LVXQOLNHO\WRH[SRVHVX൶FLHQWJDSVLQSULFHV WKH³SDUNVSUHDG´ IRU DUELWUDJHWREHIHDVLEOHIRUDVWRUHZKLFKLVVD\H൶FLHQW7KHUHDUHRFFDVLRQVZKHUHWKHJDSLV ODUJHHQRXJKEXWWKH\VHOGRPRFFXU *LXOLHWWL*URVVLDQG:DWHUVRQ  +RZHYHUDVFDQEHVHHQIRUWKHH[DPSOHGD\LQ)LJXUH 0RQGD\WK-DQXDU\  within the day there are certainly peak times when the price is over twice as much as it is in dead RIQLJKWVRFOHDUO\WKHUHLVSRWHQWLDOIRUSUR¿WDEOHGLXUQDODUELWUDJH7KXVDPRUHVXEWOHSXUFKDVH and sale strategy needs to be undertaken, in which particular periods showing the lowest prices and SDUWLFXODUSHULRGVVKRZLQJWKHKLJKHVWSULFHVZLWKLQWKHSHDNDQGR൵SHDNSHULRGVDUHXVHG7KLV OHDGVLQWXUQWRWZRFRQVLGHUDWLRQV7KH¿UVWLVWKHDSSURSULDWHUDWLRRIVWRUHVL]HWRSXPSVL]HZKLFK ZLOOLWVHOIEHGHSHQGHQWXSRQWKHURXQGWULSH൶FLHQF\7KHVHFRQGLVWKHGHYHORSPHQWRIDVWUDWHJ\ that is able to look ahead in a relatively sophisticated manner to decide on when to take in and when WRUHOHDVHHQHUJ\IURPWKHVWRUH)ODWOH\HWDO  H[DPLQHWKHQDWXUHRIVXFKDQRSWLPDOVWUDWHJ\ JLYHQWKHSDUDPHWHUVRIWKHVWRUHIRFXVLQJRQWKHORRNDKHDGWLPHLQYROYHG

5HWXUQLQJWRFRQVLGHUDWLRQRIGLXUQDOVWRUDJHFOHDUO\LWLVLQDSSURSULDWHWRKDYHDVWRUHFD-pable of carrying a large amount of energy if the purpose is to charge and discharge over relatively IHZSHULRGV,IWKHVWRUHKDVSXPSVFDSDEOHRI¿OOLQJWKHVWRUHZLWKDSRZHUUDWLQJRIP0:DQGWKH

 :HGH¿QHDVDµSDUNVSUHDG¶WKHSUR¿WDELOLW\ LQSHUFHQWDJHWHUPV RIVWRULQJSRZHUSXUFKDVHGDWDJLYHQGDWHWDQG VROGRQWKHVDPHGDWHYLDDFRQWUDFWVLJQHGDWWLPHWIRUGHOLYHU\DWWLPHW1Future price (t, t + N) – day-ahead price (t)/

day-ahead price (t).

(9)

Analyzing the Potential Economic Value of Energy Storage  RSHUDWRUHQYLVDJHVWKHVWRUH¿OOLQJRYHUDPD[LPXPSHULRGRIWKUHHKRXUV DQGGLVFKDUJLQJRYHUQR JUHDWHUDSHULRG WKHQWKHVL]HRIWKHVWRUHQHHGEHQRODUJHUWKDQP0:K 7KHUHDUHWZRPDLQGLPHQVLRQVLQÀXHQFLQJWKHVWRUDJHIDFLOLW\7KH¿UVWLVREYLRXVO\WKH URXQGWULSH൶FLHQF\RIWKHVWRUHH[SUHVVHGDVSRZHUWKDWFDQEHVROGLQWRWKHPDUNHWGLYLGHGE\ SRZHUWDNHQIURPWKHPDUNHW7KHVHFRQGOHVVREYLRXVLVWKHVL]HRIWKHVWRUHUHODWLYHWRWKHVL]HRI WKHPD[LPXPRXWSXW+RZHYHUWKHRSWLPDOVL]HRIVWRUHJLYHQSXPSUDWLQJLVLQIDFWHQGRJHQRXV EHFDXVHLWLVLQÀXHQFHGE\WKHH൶FLHQF\UDWLQJRIWKHVWRUH7KHPRUHH൶FLHQWWKHVWRUHWKHORQJHU LVWKHUDQJHRIWLPHRYHUZKLFKHQHUJ\FDQSUR¿WDEO\EHGLVFKDUJHGDWSHDN DQGFKDUJHGR൵SHDN  7KXVJLYHQPDUNHWSULFHVWKHUHDUHWZRGHWHUPLQDQWVRIWKHSUR¿WDELOLW\RIWKHVWRUHWXUQDURXQG H൶FLHQF\DQGWKHQXPEHURISHULRGVRILQWDNHDQGRXWSXWDQGWRJHWKHUWKHVHLPSDFWRQRSWLPDO VWRUH VL]H :KLOH D UDQJH RI H൶FLHQF\ UDWLQJ DQG SXPS UDWLQJV DUH WHFKQLFDOO\ FRPSDWLEOH ZLWK VWRUHVRIGL൵HUHQWVL]HVWKHGHWHUPLQDWLRQRIWKHRSWLPDOVL]HRIDVWRUHZLOOGHSHQGRQLWVDELOLW\WR at least recover the short term variable costs associated with the store operation, which in turn de-SHQGVFULWLFDOO\RQWKHGLXUQDOGL൵HUHQFHLQZKROHVDOHSULFHVDOORZLQJWKHVWRUHWRH[SORLWDUELWUDJH RSSRUWXQLWLHV :HKDYHVHHQWKDWWKHUHDUHRQO\DIHZSHULRGVLQZKLFKGDLO\SULFHVDUHDWWKHLUSHDN7KLV OLPLWVWKHQDWXUHRIVWRUDJHZKLFKHDUQVUHYHQXHWKURXJKDUELWUDJH0RUHRYHUWKHUHDUHRQO\VPDOO VHWVRIFRQVHFXWLYHWLPHVIRUZKLFKSULFHVDUHYHU\KLJKDWSHDNFRPSDUHGZLWKSULFHVDWR൵SHDN 7KHUHIRUHLQRUGHUWRDVVHVVWKHSRWHQWLDOSUR¿WDELOLW\RIDVWRUDJHSODQWRSHUDWLQJRQDGDLO\EDVLV by exploiting arbitrage opportunities in the balancing market, we performed a series of simulations DLPHGDWLGHQWLI\LQJWKHRSWLPDOQXPEHURISHULRGV PHDVXUHGDVKDOIKRXUVWRUHÀHFWWKHELGGLQJ IUHTXHQF\LQZKROHVDOHPDUNHWV ZKHQWKHVWRUHVKRXOGRSHUDWHLQRUGHUWRPD[LPLVHSUR¿WVWKURXJK

 7KLVLPSOLHVWKDWWKHDELOLW\RIDVWRUDJHIDFLOLW\WRH[SORLWSULFHYDULDWLRQIRUDUELWUDJHSXUSRVHVZLOOGHSHQGRQWKH FKDUJHDQGGLVFKDUJHUDWHVDQGKRXUVZKLFKDUHDOORZHGE\WKHUHODWLRQVKLSEHWZHHQVWRUHDQGSXPSVL]H)RURXUFDOFXODWLRQV we use actual dimension of the Huntorf plant ,which imply a charge and discharge rate of 1 hour, as discussed in more detail LQVHFWLRQ

(10)

110 / The Energy Journal

DUELWUDJH7KHPHWKRGRORJ\XQGHUO\LQJWKHSUR¿WDELOLW\VLPXODWLRQVDQGWKHNH\UHVXOWVRIVXFKVLP-XODWLRQVDUHSUHVHQWHGLQWKHVXEVHFWLRQVWKDWIROORZ

0HWKRGRORJ\IRUSUR¿WDELOLW\VLPXODWLRQV

6XSSRVHWKHSODQWKDVH൶FLHQF\UDWH RXWSXWHQHUJ\WRLQSXWHQHUJ\ RIș   ,QDGGLWLRQ the plant has input costs of xSHU0:KDQGH[SRUWFRVWVRIySHU0:K6RLWKDVUXQQLQJFRVWVRI>

1T

˜ x y]SHU0:KRIHOHFWULFDOHQHUJ\SURGXFHG

6XSSRVHWKDWWKHSODQWLVHLWKHUFKDUJLQJDWWKHIXOOUDWHRUGLVFKDUJLQJDWWKHIXOOUDWHRU LVGRLQJQRWKLQJDQGWKDWWKHUHLVQROHDNDJH,WKDVDQLQSXWSXPSLQJFDSDELOLW\RIĮ/ș0:DQGDQ export pumping capacity of Į0:

Therefore, if it operates by inputting for IJVHWWOHPHQWSHULRGV XVXDOO\KDOIKRXUV  in a day,

and exporting for the same period of time, it will input a total of WĮș0:KDQGH[SRUWDWRWDORIWĮ 0:K,QRUGHUWRGRWKLVWKHSODQW¶VVL]H ZRUNLQJFDSDFLW\ ZLOOQHHGWREHWD T/ A0:K,WLV DVVXPHGWKDWWKHVL]HRIWKHSODQWLVVPDOOHQRXJKWKDWLWGRHVQRWLQÀXHQFHPDUNHWSULFHV :KDWGHWHUPLQHVWKHRSWLPDOYDOXHIRUIJ",WZLOOQRWEHZRUWKZKLOHRSHUDWLQJWKHSODQWLI WKHFRVWVH[FHHGWKHEHQH¿WV7KHEHQH¿WVFDQEHUHSUHVHQWHGDVWKHGL൵HUHQFHEHWZHHQWKHSULFHSHU 0:KRIWKHLQSXWHOHFWULFLW\DQGWKHH൶FLHQF\ZHLJKWHGSULFHSHU0:KRIWKHH[SRUWRIHOHFWULFLW\ 7KDWLVLQSURGXFLQJ0:KRIHOHFWULFLW\H[SRUWWKHEHQH¿WZLOOEH>py 

 T

˜px@7KLVZLOO change every period, but the approach that recommends itself is to start with the lowest period for the input price pxand the highest price export period pyand then to move to the next lowest input SULFHDQGWKHQH[WKLJKHVWH[SRUWSULFHDQGVRRQ7KHKDOIKRXUVHWWOHPHQWSHULRGVDUHGLYLGHGLQ ³SHDN´DQG³R൵SHDN´SHULRGV%HFDXVHLQSHDNKRXUVSULFHVDUHXVXDOO\KLJKHUWKDQLQR൵SHDN KRXUVZHFKDUJHWKHSODQWGXULQJR൵SHDNSHULRGVDQGGLVFKDUJHGXULQJSHDNKRXUV7KHQDOOSRVVL-EOHFRPELQDWLRQVRISHDNDQGR൵SHDNSHULRGVDUHDQDO\VHG,QSURGXFLQJAXQLWVRIRXWSXW 0:K  E\SXPSLQJDVDVVXPHGWKHEHQH¿WVZLOOEH

1 1 W T W ˜

¦

ª¬   ˜ º¼ d d yt xt t A p p  where d yt

p and pdxt are the export and import price, respectively, at day d

7KHFRVWVLQWHUPVRISXPSLQJFRVWV DVVXPHGWREHWKHRQO\YDULDEOHFRVWV DUHFRQVWDQW SHU0:KDW

1 T

˜ª¬  ˜  º¼ A x y   6XEWUDFWLQJ  IURP  H[SHULPHQWLQJZLWKGL൵HUHQWYDOXHVRIIJVWDUWLQJZLWKPRYLQJWRHWF results in an optimum number of periods, where each period at least adds something in terms of PDUJLQDOQHWEHQH¿W1RWLFHWKDWRQO\WKHEHQH¿WVVLGHLQFRUSRUDWHVIJ

2QFHWKHRSWLPDOIJ is found, we get an expression in terms of A7KLVLV

* * 1 1 1 1 W T T W ­ ½ ° ª º ° ˜® ˜ ¬   ˜ ¼¬  ˜  º¼¾ ˜ ° ° ¯

¦

¿ d d yt xt t A p p x y A B    ,QRXUVLPXODWLRQVZHXVHSULFHVDWKDOIKRXUO\IUHTXHQF\DVWKLVLVFXUUHQWWUDGLQJIUHTXHQF\LQWKH8.ZKROHVDOH PDUNHW+RZHYHULIUHDOWLPHSULFHVZHUHLQWURGXFHGWKHVHZRXOGLQFUHDVHWKHRSSRUWXQLWLHVIRUDVWRUDJHIDFLOLW\WRH[SORLW sharp price variations due to demand imbalances, within the limits of the technical characteristics of the plant, and therefore LQFUHDVHLWVSUR¿WDELOLW\:HWKDQNDQDQRQ\PRXVUHYLHZHUIRUKLJKOLJKWLQJWKLVLPSRUWDQWSRLQW

(11)

Analyzing the Potential Economic Value of Energy Storage / 111 6XSSRVHWKHFRQVWUXFWLRQFRVWVRIDSODQWGHSHQGRQO\RQLWVVL]HLHWKH\DUHk · A7KHQ WKHSODQWZLOOEHZRUWKZKLOHEXLOGLQJLIWKHQHWEHQH¿WVRYHUWLPHRIEXLOGLQJWKHSODQWDUHSRVLWLYH that is       t B r r r k   1RWLFHWKDWZHQHHGQRWNQRZAWRFDOFXODWHWKLV2QHZD\ZHFRXOGHYDOXDWHWKLVLVWRDVVXPHD GLVFRXQWUDWHU HJU  DQGKHQFHHYDOXDWHDWDUJHWFRQVWUXFWLRQFRVWSHU0:KRIFDSDFLW\ ,QRXUVLPXODWLRQVZHDLPWRFDOFXODWHWKHRSWLPDOQXPEHURISHULRGVZKHQWKHVWRUDJH IDFLOLW\VKRXOGRSHUDWHE\HYDOXDWLQJWKHPDUJLQDOEHQH¿WJHQHUDWHGE\LQFUHDVLQJE\RQHDGGLWLRQDO XQLWWKHQXPEHURISHULRGVZKHQWKHVWRUHRSHUDWHV,QRUGHUWRGHWHUPLQHWKHRSWLPDOYDOXHRIIJ we GHYLVHGDSURFHGXUHLQWZRVWDJHVZKLFKUHTXLUHVVSOLWWLQJWKHVDPSOHRIKDOIKRXUO\HOHFWULFLW\SULFH GDWDFRYHULQJWKHSHULRGIURP-DQXDU\WR'HFHPEHULQWRWZRSDUWV7KHSHULRGXSWR 'HFHPEHU LQFOXVLYH LVXVHGWRGHYLVHWKHRSWLPDOVWUDWHJ\IRURSHUDWLQJWKHVWRUHLHLQWKH ¿UVWVWDJHRIWKHVLPXODWLRQWKHRSWLPDOEX\VHOOVWUDWHJ\LVLGHQWL¿HGRQWKHEDVLVRIKLVWRULFDOGDLO\ data covering the interval d «'

,QWKHVHFRQGVWDJHWKHRSWLPDOVWUDWHJ\REWDLQHGLQWKH¿UVWVWDJHLVDSSOLHGWRGDLO\GDWD with d '«'KFRYHULQJWKHSHULRG-DQXDU\WR'HFHPEHULQRUGHUWRDVVHVV WKHGL൵HUHQFHEHWZHHQH[SHFWHGDQGDFWXDOSUR¿WVZKHQWKHRSWLPDOVWUDWHJ\LGHQWL¿HGLQWKH¿UVW VWDJHLVDSSOLHGWRIXWXUHWLPHSHULRGV 3.1.1 First stage $VGLVFXVVHGHDUOLHUWKHKDOIKRXUVHWWOHPHQWSHULRGVDUHGLYLGHGLQ³SHDN´DQG³R൵SHDN´ SHULRGV7DNLQJIJ as the number of periods needed to charge and discharge the plant each day, for the j-th combination of periods at day dWKHSUR¿W H[FOXGLQJFDSLWDODQG2 0FRVWV LVJLYHQE\

1   W >  @ Sdj W

¦

yt T xt t p p  IRU M «- DQG G «'  )RUHDFKFRPELQDWLRQRISHDNDQGR൵SHDNSULFHVWKHUHVXOWVFDQEHVXPPDUL]HGRYHUWKHKLVWRULFDO GDWD G  ' } XVLQJGL൵HUHQWORFDWLRQDQGVFDOHLQGH[HV7KHPRVWREYLRXVLVWKHDULWKPHWLF mean 0

˜ , that is:

1 Ð 1/

¦

S D j d d M D   EXWLQRUGHUWRUHGXFHWKHLPSDFWRIRXWOLHUVZHFDQUHSODFHWKHPHDQZLWKWKHPHGLDQ ,IZHFKRRVHWKHPHDQRISUR¿WVDVWKHVXPPDU\LQGH[WKHRSWLPDOFRPELQDWLRQRISHDN DQGR൵SHDNSHULRGVLVWKHRQHZKLFKPD[LPL]HVWKHFKRVHQLQGH[RYHUDOOJ combinations, that is:

¬

3j º¼ j

OPT max M  

The same principle for selecting the optimal combination could be applied to other summary in-GH[HVVXFKDVWKHPHGLDQRUWKHUDWLRRIPHDQWRVWDQGDUGGHYLDWLRQ$VWKHLQWUDGD\VWUXFWXUHRI prices changes between weekdays and weekends, and also between winter and summer months, we KDYHIRXQGGL൵HUHQWRSWLPDOFRPELQDWLRQVIRUZHHNGD\VLQVXPPHUZHHNHQGVLQVXPPHUZHHN-GD\VLQZLQWHUDQGZHHNHQGVLQZLQWHU

(12)

The Energy Journal 3.1.2 Second stage ,QWKLVVWDJHWKHRSWLPDOEX\VHOOVWUDWHJLHVLGHQWL¿HGLQWKH¿UVWVWDJHDUHDSSOLHGIRUd ' «'KLQRUGHUWRREWDLQDQHVWLPDWHGGDLO\SUR¿WWKDWLV

1 ˆ  W >ˆ  ˆ @ S W

¦

d  T d d yt xt t p p ±>

1T

xy@ IRU G '«'K  where ˆd xt

p and ˆpdyt are the optimal buy and sell prices on day d

7RVXPPDUL]HWKHRXWSXWRIWKHVWUDWHJ\IRUWKHSHULRG> ' « 'K @ZHXVHGLI-ferent measures: •ഩDYHUDJHGDLO\SUR¿W

1 ˆ ˆ 1/  S  3

¦

D h d d D M h •ഩIUDFWLRQRISRVLWLYHGDLO\SUR¿WV

1 ˆ   Sˆ   3

¦

D h d ! d D FP h I ZKHUH,  LVDQLQGLFDWRUIXQFWLRQDVVXPLQJYDOXHZKHQWKHFRQGLWLRQLQEUDFNHWLVVDWLV¿HGDQG RWKHUZLVH •ഩDYHUDJHYDOXHRISRVLWLYHGDLO\SUR¿WV

1 1  ˆ  ˆ ˆ ˆ S S     ! 3 !

¦

¦

D h d d d D D h d d D I MP I p •ഩVWDQGDUGGHYLDWLRQRIGDLO\SUR¿WV

 1 / ˆ ˆ   > S ˆ @  3

¦

D h d  3 d D SD h M •ഩVWDQGDUGGHYLDWLRQRISRVLWLYHGDLO\SUR¿WV

1

 1 ˆ > @  ˆ  ˆ ˆ ˆ S S S      3 ! 3 !

¦

¦

D h d d d D D h d d D MP I SDP I 6WRFKDVWLFSURFHGXUHWR¿QGWKHRSWLPDOIJ ,QDGGLWLRQWRWKHDQDO\WLFDODSSURDFKWRWKHVHDUFKIRUWKHRSWLPDOIJdiscussed abovewe DOVRLPSOHPHQWHGDVWRFKDVWLFDSSURDFK7KHPDLQGL൵HUHQFHIURPWKHDQDO\WLFDOSURFHGXUHLVWKDW one-day-ahead forecasts of half-hourly prices are obtained through an estimated time series model EDVHGRQDUROOLQJZLQGRZSURFHGXUHIRUHDFKGD\RI,QSDUWLFXODUGDWDIURPWKHEHJLQQLQJ

 7KHVL]HRIWKHUROOLQJZLQGRZLVNHSWFRQVWDQWE\DGGLQJDQHZREVHUYDWLRQWRWKHRULJLQDOVHULHVRIGD\VDQGUHPRY-LQJWKHROGHVWREVHUYDWLRQDWHDFKVXFFHVVLYHVWDJH

(13)

Analyzing the Potential Economic Value of Energy Storage 

RIWRWKHHQGRIZHUHXVHGWRHVWLPDWH6(7$5  PRGHOV with daily dummy variables

IRUHDFKRIWKHVHWWOHPHQWSHULRGV 7ZRGL൵HUHQW6(7$5PRGHOVKDYHEHHQFRQVLGHUHGDFODVVLFDOHVWLPDWRUYHUVLRQ EDVHG RQUHFXUVLYH2/6 DQGDQRXWOLHUUREXVWYHUVLRQEDVHGRQDSRO\QRPLDOZHLJKWLQJIXQFWLRQ *URVVL DQG1DQ  2QFHWKHSUHGLFWHGSULFHYDOXHVDUHREWDLQHGWKHRSWLPDOEX\VHOOVWUDWHJ\LVGHFLGHGHDFK GD\XVLQJWKHSULFHIRUHFDVWVIRUWKHQH[WGD\)RULQVWDQFHRQZHREWDLQWKHIRUHFDVW SULFHVIRUHDFKVHWWOHPHQWSHULRGRIDQGDVVXPLQJIJ ZHGHFLGHWKHRSWLPDOEX\VHOO VWUDWHJ\EX\LQJDWWKHPLQLPXPIRUHFDVWSULFHDQGVHOOLQJDWWKHPD[LPXPIRUHFDVWSULFH2IFRXUVH when IJ!PD[LPXPDQGPLQLPXPDUHFRPSXWHGDVDYHUDJHYDOXHVZLWKLQWKHSHULRGGH¿QHGE\IJ 3.2 Simulation results 7KHSURFHGXUHVGHVFULEHGLQVHFWLRQKDYHEHHQDSSOLHGWR¿QGWKHRSWLPDOIJunder three UHDOLVWLFYDOXHVRIWKHH൶FLHQF\UDWHIRUVWRUDJHWHFKQRORJLHV ș 7KH¿UVWVWDJHZDV LPSOHPHQWHGWRGH¿QHWKHRSWLPDOEX\VHOOVWUDWHJ\ RSWLPDOSHULRGWREX\R൵SHDNDQGWRVHOODW SHDNWLPH XVLQJSULFHGDWDIRUWKHSHULRG±ZKLOHLQWKHVHFRQGVWDJHLWZDVDSSOLHGWR SULFHGDWDIRUWKHZKROH\HDU2XUVLPXODWLRQUHVXOWVDUHJHQHUDWHGRQWKHEDVLVRIWHFKQLFDO SDUDPHWHUVW\SLFDOO\DVVRFLDWHGZLWK&RPSUHVVHG$LU(QHUJ\6WRUDJH &$(6 WHFKQRORJ\ +HUHLWLVWDNHQDVJLYHQWKDWWKHSODQWKDVEHHQFRQVWUXFWHGVRWKHPDMRUSDUWRIWKHRSHU-DWLQJFRVWVWKHFRVWVZHWDNHLQWRDFFRXQWDUHWKRVHLQYROYLQJFKDUJLQJDQGGLVFKDUJLQJWKHSODQW 7KHFRVWVRISXPSLQJDQGWXUELQLQJIRUDFRPSUHVVHGDLUHQHUJ\VWRUDJHSODQWDUHJLYHQE\/XQG  DV¼SHU0:KDQG¼SHU0:KUHVSHFWLYHO\:HWUDQVODWHWKHVHYDOXHVLQWR…0:K DWDQH[FKDQJHUDWHRI¼SHU…(QHUJ\LQSXWLVDVVXPHGWREHSXUFKDVHG VSRW DWPLGPDUNHW (OH[RQSULFHVDQGVROGDOVRDWWKHVHSULFHVREWDLQLQJZKHQVDOHVWDNHSODFH7KHSODQWRSHUDWHVIRUD QXPEHURISHULRGV¿OOLQJ GHSHQGHQWRQVL]HRISXPSUHODWLYHWRFDSDFLW\ DQGWKHVDPHQXPEHURI SHULRGVGLVFKDUJLQJODWHULQWKHGD\RURQWKHQH[WGD\,QRXUVLPXODWLRQVof the scenario analysis we DVVXPHRSHUDWLQJZLWKDVWDQGDUGFRPSUHVVHGDLUVWRUDJHSODQWZLWKDVWRUDJHFDSDFLW\RI0:K DQGDSXPSVL]HRI0: This means that the average charging/discharging time is one hour,

thus we have to exclude combinations of charge/discharge with less than one hour interval between WKHP )XUWKHUPRUH WKH SULFH YDULHV LQ WKH WZR VHWWOHPHQW SHULRGV XVHG IRU FKDUJLQJGLVFKDUJLQJ SURFHGXUHWKXVZHKDYHWRWDNHWKHDYHUDJHSULFHRIWZRFRQWLJXRXVSHULRGV

Assessing an arbitrage procedure usually implies the computation of risk measures which PXVWEHXVHGWRFRUUHFWO\HYDOXDWHWKHUHWXUQRIWKHLQYHVWPHQW 9DWDQLHWDO1DVURODKSRXUHW DO )RUWKLVUHDVRQLQWKHIROORZLQJ¿JXUHVWKH6KDUSH5DWLR $YHUDJH3UR¿W6WDQGDUG'H-YLDWLRQRI3UR¿WV ZLOOEHVKRZQDORQJVLGHWKHDYHUDJHSUR¿WV7KHFDOFXODWHGLQGH[HVZHUHREWDLQHG LQVWDJHWZRRIWKHSURFHGXUHIRUGL൵HUHQWYDOXHVRIș H൶FLHQF\UDWH and IJ QXPEHURISHULRGVRI RSHUDWLRQ XVLQJWKHDULWKPHWLFPHDQDVWKHVXPPDU\LQGH[WRGHWHUPLQHWKHRSWLPDOVWUDWHJ\LQWKH ¿UVWVWDJHRIWKHSURFHGXUH

The optimal value of IJ was also determined in stage two by considering only positive prof-LWVDQGWKHSURSRUWLRQRISRVLWLYHSUR¿WVDFURVVDOOYDOXHVRIIJ:KHQGL൵HUHQWVXPPDU\LQGH[HVZHUH used in the analysis they generated similar optimal values of IJWRWKHRQHVUHSRUWHGLQWKH¿JXUHV

 6(7$5PRGHOVDUHDXWRUHJUHVVLYHPRGHOVZKHUHDXWRUHJUHVVLYHSDUDPHWHUVYDU\DFFRUGLQJWRDWKUHVKROGZKLFKLV HVWLPDWHGVLPXOWDQHRXVO\WRDXWRUHJUHVVLYHFRH൶FLHQWV

 7KHVHSDUDPHWHUVUHÀHFWWKHWHFKQLFDOFKDUDFWHULVWLFVRIWKHRQO\&$(6SODQWFXUUHQWO\RSHUDWLQJLQ(XURSH.UDIW-ZHUN¶V+XQWRUISODQWORFDWHGLQ*HUPDQ\

(14)

The Energy Journal

EHORZ)RUWKLVUHDVRQRXUGLVFXVVLRQZLOOIRFXVRQWKHUHVXOWVEDVHGRQWKHPHDQSUR¿WVDVWKH

main summary index. 2XUVLPXODWLRQVVHHNWRPD[LPLVHDYHUDJHSUR¿WVUDWKHUWKDQWKHPD[LPL]D-WLRQRIWKHWRWDOSUR¿WRQDGDLO\EDVLVEHFDXVHWKLVVWUDWHJ\ZRXOGUHTXLUHDFRQVWDQWUHDGMXVWPHQW of operations in response to observed prices which is limited by the technical characteristics of the &$(6SODQW

)LJXUH OHIWSDQHO UHSRUWVWKHYDOXHRIWKHDYHUDJHHVWLPDWHGSUR¿WVIRUWKHZKROHRI DVVRFLDWHGZLWKGL൵HUHQWYDOXHVRIIJ,WFDQEHVHHQIRUDQ\YDOXHRIșthe optimal value of IJ LQWKLVFDVHLVZLWKDYHUDJHSUR¿WVLQFUHDVLQJZLWKWXUQDURXQGH൶FLHQF\7KH6KDUSH5DWLR ULJKW SDQHO FRQ¿UPVDVH[SHFWHGWKHEHVWSHUIRUPDQFHOLQNHGWRKLJKHUYDOXHVRIH൶FLHQF\+RZHYHU WKHWUDMHFWRU\UHODWHGWRWKHKLJKHVWOHYHORIH൶FLHQF\  LVÀDWWHUWKDQWKHRWKHUVPHDQLQJWKDW IRUKLJKOHYHOVRIH൶FLHQF\ZKHQIJLQFUHDVHVWKHOHYHORIULVNGHFUHDVHVPRUHTXLFNO\WKDQWKHSUR¿W )XUWKHUPRUHIRUWKHKLJKHVWOHYHORIH൶FLHQF\WKHRSWLPDOLW\LQWHUPVRIULJKWEDODQFHEHWZHHQ SUR¿WDQGULVNLVLQGL൵HUHQWO\UHDFKHGZKHQIJLVHTXDOWRRU /RRNLQJDWWKHGL൵HUHQWSORWVIRUFRPELQDWLRQVRIVHDVRQVDQGGD\VRIWKHZHHNLWLVLQWHU-HVWLQJWRQRWHWKDWWKHPD[LPXPDYHUDJHSUR¿WVDUHREWDLQHGGXULQJZHHNGD\VLQZLQWHU )LJXUH OHIWSDQHO ZKLOHGXULQJZHHNGD\VLQVXPPHUDYHUDJHSUR¿WVDUHQRQQHJDWLYHRQO\IRUWKHFDVHRIș ODUJHUWKDQ )LJXUHOHIWSDQHO )XUWKHUPRUHGXULQJZHHNGD\VLQZLQWHUUHODWLYHO\KLJKOHYHOV RISUR¿WDUHFRPSDWLEOHZLWKDUDQJHRIYDOXHVRIIJEHWZHHQDQG,WLVYHU\LQWHUHVWLQJWRQRWHWKDW DFFRUGLQJWRWKH6KDUSH5DWLR )LJXUHULJKWSDQHO WKHRSWLPDOYDOXHRIIJin weekdays of winter LVDQGWKHVKDSHRIWKHWUDMHFWRULHVDUHFRPSOHWHO\GL൵HUHQWWKDQLQDOOWKHRWKHUFDVHVEHFDXVH the performance index clearly increases for values of IJIURPWR

7KHUHIRUHFRPELQLQJDQDYHUDJHSUR¿WLQGH[ZLWKDULVNPHDVXUHLQGH[HQDEOHVWRFOHDUO\ identify the optimal value of IJ,QZHHNGD\VRIVXPPHUWKHULVNPHDVXUHIROORZVDWUDMHFWRU\ YHU\VLPLODUWRWKHDYHUDJHSUR¿WWKXVWKHSORWRIWKH6KDUSH5DWLR )LJXUHULJKWSDQHO FRQ¿UPV WKHUHVXOWVGLVSOD\HGLQWKHOHIWSDQHORIWKHVDPH¿JXUH

The results based on the stochastic approach, which rely on one-day-ahead price forecasts, are perfectly comparable with the analytical procedure because the selected optimal strategy is al-ZD\VZLWKLQRQHGD\

 7KHVHUHVXOWVDUHQRWUHSRUWHGIRUEUHYLW\EXWDUHDYDLODEOHIURPWKHDXWKRUVRQUHTXHVW,QSDUWLFXODUWKHRXWSXWRIWKH SURFHGXUHZKHQWKHVXPPDU\LQGH[LVJLYHQE\UDWLRRIVWDQGDUGGHYLDWLRQ ULVNPHDVXUH WRWKHPHDQSUR¿WLVYHU\VLPLODU WRWKDWREWDLQHGZKHQFRQVLGHULQJMXVWWKHPHDQSUR¿W

 :HWKDQNDQDQRQ\PRXVUHYLHZHUIRUUDLVLQJWKLVLPSRUWDQWFRQFHSWXDOSRLQW

)LJXUH$YHUDJHSUR¿WDQG6KDUSH5DWLR  E\YDOXHRIIJ. Results rely on the optimal VWUDWHJ\REWDLQHGRQWKHSHULRG±

(15)

Analyzing the Potential Economic Value of Energy Storage 

2QFHSUHGLFWHGYDOXHVDUHREWDLQHGWKHRSWLPDOEX\VHOOVWUDWHJ\LVGHFLGHGHDFKGD\XVLQJ WKHIRUHFDVWHGSULFHVRIQH[WGD\)RULQVWDQFHDWWLPHT the forecasted prices for each settlement period of time T + 1 are available and, assuming IJ WKHRSWLPDOEX\VHOOVWUDWHJ\LVWREX\DWWKH minimum forecasted price and sell at the maximum forecasted price within day T 2IFRXUVH when IJ!PD[LPXPDQGPLQLPXPDUHFRPSXWHGDVDYHUDJHYDOXHVLQWKHSHULRGGH¿QHGE\IJ

To give an idea of the main results obtained using the stochastic approach, the average SUR¿WVDQGWKH6KDUSH5DWLRVDUHUHSRUWHGLQ)LJXUHXVLQJDUREXVW6(7$5  PRGHOIRUWKH ZKROH\HDU &RPSDUHGWRWKHUHVXOWVRIWKHDQDO\WLFDODSSURDFKLOOXVWUDWHGLQ)LJXUHZH¿QGWKDWW  FRXOGDOVREHFRQVLGHUHGDVWKHRSWLPDOYDOXHLQRUGHUWRPD[LPLVHDYHUDJHSUR¿WV0RUHRYHUWKH DYHUDJHSUR¿WVREWDLQHGZLWKWKHVWRFKDVWLFDSSURDFKIRUYDOXHVRIIJless thanDUHKLJKHUWKDQWKRVH REWDLQHGXVLQJWKHDQDO\WLFDODSSURDFK/RRNLQJDWWKH6KDUSH5DWLR )LJXUHULJKWSDQHO WKHWUD-MHFWRULHVDUHYHU\VLPLODUWRWKRVHREVHUYHGLQ)LJXUHDWOHDVWIRUWKHKLJKHVWOHYHORIH൶FLHQF\WKH OLQHLVYHU\ÀDWIRUORZYDOXHVRIIJ and the best performance is even compatible with IJ 

:KHQSHUIRUPLQJVLPLODUVLPXODWLRQVWRWKRVHSUHVHQWHGLQ)LJXUHVDQGZKLFKGLVWLQ-guish between days of the week and seasons, but adopting the rolling window approach discussed DERYHUDWKHUWKDQDSSO\LQJWKHRSWLPDOVWUDWHJ\WKURXJKRXWWKHIRUHFDVWSHULRG  ZH¿QGWKDW

 7KHRXWOLHUUREXVW6(7$5PRGHOLVHVWLPDWHGDSSO\LQJDSRO\QRPLDOZHLJKWLQJIXQFWLRQ VHH*URVVLDQG1DQ  )LJXUH$YHUDJHSUR¿WDQG6KDUSH5DWLR ZHHNGD\VZLQWHU E\YDOXHRIIJ. Results rely

RQWKHRSWLPDOVWUDWHJ\REWDLQHGRQWKHSHULRG±

)LJXUH$YHUDJHSUR¿WDQG6KDUSH5DWLR ZHHNGD\VVXPPHU E\YDOXHRIIJ. Results UHO\RQWKHRSWLPDOVWUDWHJ\REWDLQHGRQWKHSHULRG±

(16)

The Energy Journal

the results for weekdays in winter are virtually unchanged, while for weekdays in summer the op-timal value of IJLQFUHDVHVWRIRUDOOOHYHOVRIH൶FLHQF\DOWKRXJKZLWKVLPLODUHVWLPDWHGDYHUDJH SUR¿WVIRUWKHIRUHFDVWSHULRG DVLOOXVWUDWHGLQ)LJXUHOHIWSDQHO :KHQWKH6KDUSH5DWLRLVFRQ-VLGHUHG )LJXUHULJKWSDQHO WKHRSWLPDOYDOXHRIIJLVZKHQWKHH൶FLHQF\LVZKLOHLWLVVWLOO IRUORZHUH൶FLHQF\OHYHOV ,QVXPPDU\WKHUHVXOWVRIRXUVLPXODWLRQVLQGLFDWHWKDWDYHUDJHSULYDWHSUR¿WVFDQEHSRVL-WLYHIRUDVX൶FLHQWO\H൶FLHQWVWRUHDQGFDQEHPD[LPLVHGE\FKDUJLQJDQGGLVFKDUJLQJHQHUJ\RYHU DUHODWLYHO\OLPLWHGQXPEHURISHULRGV7KHFRPSXWDWLRQRIULVNPHDVXUHVFRPELQHGZLWKWKHDYHUDJH SUR¿WVOHDGVWRFRQFOXVLRQVZKLFKLQVRPHFDVHVFRXOGGL൵HUIURPWKRVHREWDLQHGZKHQMXVWUHO\LQJ RQSXUHSUR¿WV2XUUHVXOWVDOVRLQGLFDWHWKDWGL൵HUHQWVWUDWHJLHVPLJKWQHHGWREHHPSOR\HGLQRUGHU WRPD[LPLVHSUR¿WVGHSHQGLQJRQZKHWKHUWKHVWRUHRSHUDWHVGXULQJZHHNGD\VRUZHHNHQGVDQG GXULQJGL൵HUHQWVHDVRQV

4. FORESEEABLE CHANGES IN THE PRICE STRUCTURE

6R IDU ZH KDYH H[DPLQHG WKH SRVVLELOLWLHV IRU DUELWUDJH XQGHU D QXPEHU RI OLPLWLQJ DV-VXPSWLRQV:HKDYHDVVXPHGWKDWWKHDYHUDJHJDSEHWZHHQORZDQGKLJKSULFHVLVOLNHO\WRUHPDLQ FRQVWDQWLQWRWKHIXWXUHDOWKRXJKWKHUHDUHIRUFHVWKDWZLOOSXVKWKLVLQERWKGLUHFWLRQV7KHUHIRUHZH VKRXOGFRQVLGHUWKHQDWXUHRIWKHVHIRUFHVWRVRPHH[WHQW

)RUH[DPSOHLQFUHDVHGXVHRI³VPDUW´WHFKQRORJLHVZLWKLQWKHKRPHDQGEXVLQHVVPD\ smooth power demand over the day relative to the situation at present, lowering margins between SHDNDQGR൵SHDNSULFHV2QWKHRWKHUKDQGWKH*HUPDQH[SHULHQFH *URVVLHWDO LOOXVWUDWHV that a key factor relates to what is assumed about plant that is retired, once renewables become more LPSRUWDQW,ILQH൶FLHQWSHDNLQJSODQWLVUHWLUHGWKHJDSFRXOGJURZZKHUHDVLIVXEVWDQWLDOEDVHORDG SODQWLVUHWLUHGWKHJDSPD\DJDLQQDUURZ%XWWKHDQVZHUDFWXDOO\GHSHQGVTXLWHVXEWO\RQWKHQD-WXUHRIWKHH[LVWLQJSODQW¶VPDUJLQDOFRVWVUHODWLYHWRWKHPDUJLQDOFRVWVRIWKHSODQWWKDWLVUHWDLQHG DQGLWLVQRWSRVVLEOHWRJLYHDJHQHUDODQVZHURQWKLVSRLQW7KHEHQH¿WVRIDUELWUDJHPD\HLWKHU LQFUHDVHRUGHFUHDVHRYHUWLPH  :HPDLQWDLQWKHDVVXPSWLRQWKDWWKHVWRUHLVWRRVPDOOLWVHOIWRLQÀXHQFHSULFHVVLJQL¿FDQWO\DOWKRXJKZHDUHQRWVSH-FL¿FRQWKHVL]HRIWKHVWRUH7RSXWWKLVSRLQWVOLJKWO\GL൵HUHQWO\ZHDVVXPHWKHUHLVVX൶FLHQWFDSDFLW\WKDWFDQEHSXUFKDVHG LQWKHQLJKWWLPHSHULRGZLWKRXWFDXVLQJDQLQFUHDVHLQSULFHVDQG DOHVVHUSUREOHP WKHPDUNHWLVZLOOLQJWRWDNHSRZHULQ SHDNSHULRGVZLWKRXWWKHDGGLWLRQDOVXSSO\ORZHULQJSULFHVPHDVXUDEO\

)LJXUH$YHUDJHSUR¿WDQG6KDUSH5DWLR  E\YDOXHRIIJ. Results rely on the day-ahead SUHGLFWHGSULFHVREWDLQHGWKURXJKWKHHVWLPDWLRQRIDUREXVW6(7$5  PRGHO

(17)

Analyzing the Potential Economic Value of Energy Storage  )LJXUHLOOXVWUDWHVWKHLGHDV6XSSRVHLQLWLDOO\WKDWGHPDQGUDQJHVEHWZHHQ'1 and D R൵SHDNDQG' and DDWSHDN,IVRPHSODQWDWWKHORZHVWHQGRIWKHPHULWRUGHURUVXSSO\FXUYH 6LVUHWLUHG VD\QXFOHDUSRZHUHGDQGFRDOSRZHUHGSODQW WKHQWKHVXSSO\FXUYHVKLIWVWR6¶WKH JUHHQOLQH%RWKUDQJHVKDYHLQFUHDVHGEXWWKHORZHUUDQJHKDVLQFUHDVHGPRUHDQGWKHPHDQYDOXH RIR൵SHDNSULFHKDVLQFUHDVHG+RZHYHUWKLVLVGXHWRWKHELJMXPSLQPDUJLQDOFRVW DQGVRSULFH  DWWKHORZHUHQGRIWKHPHULWRUGHU7KHRSSRVLWHH൵HFWFRXOGDVHDVLO\KDSSHQLIWKHUHLVDELJMXPS LQWKHGLVWULEXWLRQWRZDUGVWKHXSSHUHQGRIWKHPHULWRUGHU :LOOWKHXQGRXEWHGJURZWKLQUHQHZDEOHJHQHUDWLRQKHOSRUKDUPDVWRUDJHXQLW¶VSUR¿WDELO-LW\"7RH[DPLQHWKLVTXHVWLRQZHIRFXVRQWKHFKDUDFWHULVWLFVRIZLQGJHQHUDWLRQLQDQG )LJXUH$YHUDJHSUR¿WDQG6KDUSH5DWLR  E\YDOXHRIIJ. Results rely on the optimal

VWUDWHJ\REWDLQHGWKURXJKDUROOLQJZLQGRZSURFHGXUH

)LJXUH,OOXVWUDWLYHPRYHPHQWVLQWKHPHULWRUGHUDQGWKHLUH൵HFWRQDYHUDJHSHDNDQGR൵ peak prices

(18)

The Energy Journal

:H¿UVWH[DPLQHZKHWKHUZLQGJHQHUDWLRQLVORZHURUKLJKHULQR൵SHDNWLPHVWKDQDWSHDNWLPHV DQGPRUHVSHFL¿FDOO\ZKHWKHULWLVORZHURUKLJKHUGXULQJWKHWLPHVZKHQDVWRUHLVPRVWOLNHO\WR EHWDNLQJLQHOHFWULFLW\

7DEOHFRQWDLQVGDWDZKLFKEHDUVRQWKHVHLVVXHV7KHRYHUDOODQGVRPHZKDWXQVDWLVIDF-tory, impression from the data is that the vagaries of wind are such as to make any answer prob-OHPDWLF/RRNLQJDWJHQHUDWLRQLVKLJKHUDWWKHSHDNWKDQWKHR൵SHDNDOVRKLJKHUWKDQDWWKH ORZHVWGHPDQGSHULRGRIWKHGD\+RZHYHUGDWD\LHOGVWKHRSSRVLWHFRQFOXVLRQ0RUHRYHU WRWDOZLQGJHQHUDWLRQLQLVDFWXDOO\KLJKHUWKDQLQVRZHFDQQRWLQIHUWKDWWKHGL൵HUHQFH LQLVWKDWPRUHKDVFRPHRQVWUHDP+HQFHDVPRUHZLQGFRPHVRQVWUHDPRYHUWLPHWKHSULFH JDSEHWZHHQWKHKLJKHVWDQGORZHVWSULFHWLPHVPLJKWHLWKHULQFUHDVHRUGHFUHDVH

6RODUJHQHUDWLRQ LV HYHQPRUHGL൶FXOWWRDVVHVV VLQFH1DWLRQDO*ULG GRHV QRWPHDVXUH LWFHQWUDOO\DQG*ULGZDWFKKDVRQO\FROOHFWHGWKHGDWDEDVHGRQDGL൵HUHQWDQGSRVVLEO\GXELRXV IUDPHZRUNVLQFHODWH2FWREHU,QVWHDGLWLVLPSOLFLWLQWKH/RDGGDWD&OHDUO\RQDYHUDJHWKHUH is more solar generation in the middle of the day and if, as in Germany, there were a midday peak in ORDGWKLVZRXOGQRWEHKHOSIXOWRVWRUDJHSURVSHFWV+RZHYHUWKHUHLVQRHYLGHQFHRIDPLGGD\SHDN LQWKH8.DQGWKHKLJKHVWFRQVXPSWLRQKRXUVFRPPDQGLQJWKHKLJKHVWSULFHVWHQGWREHEHWZHHQ DURXQGDQGZHOODIWHUWKHWLPHZKHQVRODUJHQHUDWLRQLVLPSRUWDQW )LQDOO\ORRNLQJRYHUWKH\HDUWKHUHLVREYLRXVO\PRUHVRODUJHQHUDWLRQLQVXPPHUZKHQ ORDGLVORZHUDVDUHSULFHV7DEOHVKRZVXVWKDWLWLVPDUNHGO\ZLQGLHULQWKHZLQWHURQDYHUDJH WKDQLQRWKHUVHDVRQVEXWDJDLQWKHUHDUHVXEVWDQWLDOGL൵HUHQFHVDVEHWZHHQDQG3RZHU prices do not show any particularly marked seasonal variations though, in part because of planned PDLQWHQDQFHRIPDMRUSODQWLQWLPHVRIORZHUORDG

,QVXPHYDOXDWLQJWKHLPSDFWRIJURZWKLQUHQHZDEOHVRQSULFHUHODWLYHVLVVXEMHFWWRVLJ-QL¿FDQWXQFHUWDLQW\1HYHUWKHOHVVLWLVFOHDUWKDWZLQGJHQHUDWLRQDQGZLQGIRUHFDVWVGRLQÀXHQFH SRZHUSULFHV

7XUQLQJWRWKLVLVVXHZHORRNDWSULFHSUHGLFWLRQVEDVHGRQZLQGIRUHFDVWV:HKDYHSHU-IRUFH WR LJQRUH WKH LPSDFW RI VRODU HQHUJ\ GXH WR ODFN RI GDWD DV H[SODLQHG DERYH:H DUH DOVR DVVXPLQJDZD\XQH[SHFWHGGLYHUJHQFHVIURPORDGVRWKDWORDGLVD൵HFWHGRQO\E\VWDQGDUGIDFWRUV VXFKDVWLPHRIGD\GD\RIZHHNHWFDQGWKHUHLVE\DVVXPSWLRQQRGHPDQGPDQDJHPHQW7KHUH-IRUHSULFHVZLOOEHGHWHUPLQHGE\WKHIDFWRUVLQÀ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

6SULQJ 6XPPHU Autumn :LQWHU 9DULDWLRQIURPDQQXDOPHDQSHUFHQW   ± ± ± 

 ± ±   

Time of day comparison 3HUFHQW3HDNRYHUDYHUDJH 3HUFHQW3HDNRYHUTXLHWWLPH

0HDQV  ± ±

(19)

Analyzing the Potential Economic Value of Energy Storage 

EHHQDUFKLYHGE\WKH³*ULGZDWFK´ZHEVLWH7KHH[SORUDWLRQKHUHIRFXVHVRQGDWDIRUHFDVWLQJRYHU WKHFDOHQGDU\HDU

:HZLVKWRSUHGLFWSULFHEDVHGXSRQORDGDQGZLQGJHQHUDWLRQLQRUGHUWRH[DPLQHZKHWKHU WKHUHLVDSUHGLFWDEOHSDWWHUQ7KHLPSOLFLWDVVXPSWLRQLVWKDWDSDUWIURPZLQGRWKHUJHQHUDWLRQLV essentially controllable and will involve a portfolio combination of gas and coal generation varied DFFRUGLQJWRUHODWLYHIDFWRUSULFHPRYHPHQWV:LQGRQWKHRWKHUKDQGLVQRWFRQWUROODEOHEXWPD\ EHIRUHFDVW2IFRXUVHORDGLVSRWHQWLDOO\HQGRJHQRXVEHFDXVHORDGDQGSULFHPD\EHYLHZHGDV EHLQJMRLQWO\GHWHUPLQHGE\GHPDQGDQGVXSSO\IDFWRUV+HQFHZHLQVWUXPHQWIRUORDGLQH[DPLQLQJ WKHLPSDFWRIZLQGIRUHFDVWVDQGORDGRQSULFH0RUHIRUPDOO\RXUPRGHOLVDVIROORZV 1, 1, 1,    f f f t t t t t t p g L W

where the meaning of f1, t t

x is the forecast at t of the value in t + 1 for a generic variable ‘x¶p is wholesale power price, L is load and WLVZLQGJHQHUDWLRQ$VLPLODUPRGHOFRXOGEHXVHGIRUORQ-JHUWHUPIRUHFDVWV/RDGLVLQVWUXPHQWHGIRUWKHVHSXUSRVHVE\DGHWHUPLQLVWLFSRO\QRPLDOPRGHORI WKHGD\DQGWLPHRIGD\:LQGJHQHUDWLRQIRUHFDVWVFRPHIURPWKH*ULGZDWFKVLWHDQGSULFHLVWKH $3;GD\DKHDGIRUZDUGPLGSULFHIRUWKDWKDOIKRXU7KH,9UHJUHVVLRQLVVKRZQLQ7DEOH7KH FRH൶FLHQWVIRUERWKUHJUHVVRUVDUHYHU\VLJQL¿FDQW %DVHGXSRQWKHOLQHDUUHJUHVVLRQZH¿QGWKDWWKHHODVWLFLW\RISULFHZLWKUHVSHFWWRORDGDW WKHPHDQLV7KHHODVWLFLW\RISULFHZLWKUHVSHFWWRWKHZLQGIRUHFDVWLVMXVW7RLQWHUSUHW this, note that a one standard deviation change in the forecast for wind, at the mean, would result in DFKDQJHLQSULFHRI…ZKHUHWKHDYHUDJHSULFHLV…SHU0:K ,QWHUSUHWLQJWKLV¿JXUHLQWKHFRQWH[WRIRXUTXHVWLRQQHDUWHUPZLQGIRUHFDVWVFOHDUO\GR KDYHDQLPSDFWRQSULFHZKLFKLVPHDVXUHDEOH$WWKHVDPHWLPHDVLJQL¿FDQWFDOPSHULRGGRHVQRW FKDQJHSULFHE\HQRXJKWRPDNHLWZRUWKZKLOHWRVWRUHIRUORQJHUWKDQDGD\DWFXUUHQWYDOXHV7KLV LVEHFDXVHWKHGLXUQDOYDULDWLRQLQSULFHGZDUIVWKHLPSDFWRIZLQGRQSULFH 7KLVOHDYHVRSHQWKHTXHVWLRQRIWKHLPSDFWRIJUHDWHUZLQGSHQHWUDWLRQDQGSRVVLEOHORQ- JHUWHUPIRUHFDVWV+RZHYHUVLPLODUH[SHULPHQWVRQSULFHEDVHGXSRQGD\DKHDGIRUHFDVWVIRU,UH-ODQGZKHUHZLQGLVDWVXJJHVWRQO\DPRGHVWLPSDFWRQSULFH7KHKRXUIRUHFDVWUHSRUWHG  7KH*ULGZDWFKGDWDDUHYHU\PXFK³DVLV´6XEVWDQWLDOFOHDQLQJLVUHTXLUHGLQRUGHUWRUHQGHUWKHPVXLWDEOHIRUDQDO\-VLV7KHUHSRUWVRQZKLFKZHEDVHRXUDQDO\VLVDUHKRXUO\RQWKHKDOIKRXUZKHUHJDSVLQUHSRUWLQJKDYHEHHQVPRRWKHG:H concentrate on forecasts of wind and ignore solar power, because until very recently this appears not to be measured as an RXWSXWDWJULGVFDOHLQ%ULWDLQUDWKHULWIHHGVLQWRWKHGLVWULEXWLRQQHWZRUNDQGLPSDFWVQHJDWLYHO\RQORDG  /HVVIRUPDOHVWLPDWHVIRU,UHODQGVXJJHVWWKDWDRQHVWDQGDUGGHYLDWLRQXSZDUGV GRZQZDUGV LQWKHZLQGIRUHFDVW DWWKHPHDQFUHDWHVDOLWWOHOHVVWKDQDVKLIWGRZQZDUGV XSZDUGV LQWKHGD\DKHDGSULFH7KLVLVRQWKHEDVLVRIDWKUHH PRQWKSHULRGLQZLQWHUEXWZLWKRXWFRUUHFWLQJIRUSRWHQWLDOHQGRJHQHLW\RIORDGDQGXVLQJWKH($ ¿UVWH[DQWH  UXQRISULFHV 7DEOH,9UHJUHVVLRQRIIRUZDUGSULFHRQSUHGLFWHGORDGDQGIRUHFDVWZLQG

Linear Log log

&RH൶FLHQW Standard error &RH൶FLHQW Standard error

3UHGLFWHG/RDG  ±  ±   )RUHFDVWZLQG ±  ±  ± ±   5VTXDUHG   2EHUYDWLRQV   1RWHV,QVWUXPHQWVIRU/RDGDUHGD\WLPHVTXDUHVDQGFXEHVRIWKHVHLQWHUDFWLRQVEHWZHHQWKHVH7KH5VTXDUHGIRUWKH¿UVW VWDJHLV

(20)

The Energy Journal

YLD*ULGZDWFKKDVDVLPLODUDOWKRXJKVRPHZKDWOHVVHULPSDFWRQSULFH%XWZKDWRIORQJHUWHUP forecasts that might predict calm or a windy period for several days?

Here, there is a potential problem from the viewpoint of capturing market-relevant infor-PDWLRQWRHQJDJHFRPSDQLHVWRVWRUHIRUVHYHUDOGD\VUDWKHUWKDQKROGLQJGLXUQDOO\/RQJHUWHUP IRUHFDVWVIRU%ULWDLQDSSHDUQRWWREHSXEOLVKHGEXWWKH%HOJLDQV\VWHPRSHUDWRUSXEOLVKHVIRUHFDVWV IRUXSWRDZHHNDKHDG6LPSOHFDOFXODWLRQVZHKDYHSHUIRUPHGVXJJHVWWKDWWKHVHDUHUDWKHULQDFFX-UDWHEH\RQGDURXQGWKUHHGD\VRXW6LPLODUO\D6SDQLVKFRPPHUFLDOZHEVLWH 0HWHRORJLFD SURGXFHV IRUHFDVWVIRUH[DPSOHIRU*HUPDQUHJLRQVEXWDJDLQEH\RQGDIHZGD\VWKHGL൵HUHQFHVEHWZHHQ DFWXDODQGSUHGLFWHGYDOXHVRQWKHVHDUHH[WUHPHO\ZLGH$WSUHVHQWOHYHOVRIZLQGSHQHWUDWLRQUHOD-WLYHWRÀH[LEOHELGGDEOHSODQWDGD\¶VQRWLFHLVHQRXJKIRUSODQQLQJSXUSRVHV+RZHYHULWUHPDLQV SRVVLEOHWKDWLIZLQGSHQHWUDWLRQVKRXOGLQFUHDVHVLJQL¿FDQWO\RUELGGDEOHÀH[LEOHSODQWEHFRPHV VKRUWDFRPPHUFLDOLPSHUDWLYHWRGHYHORSEHWWHUORQJWHUPZLQGIRUHFDVWVPD\DULVH 5. CONCLUDING REMARKS :HKDYHVKRZQWKDWJLYHQWKHFXUUHQWGL൵HUHQFHVLQSHDNDQGR൵SHDNSRZHUSULFHVLWLV SRVVLEOHWRSUR¿WDEO\RSHUDWHDVWRUHRYHUDOLPLWHGQXPEHURISHULRGVGXULQJWKHGD\LIZHLJQRUH WKHVWRUH¶VLQLWLDOFRQVWUXFWLRQFRVWV0RUHRYHURXUDQDO\VLVRIWKHLPSDFWRIZLQGRXWSXWIRUHFDVWRQ SRZHUSULFHVLQGLFDWHVWKDWDWWKHFXUUHQWWLPHWKHUHDUHLQVX൶FLHQWSUR¿WDELOLW\LQFHQWLYHVWRVWRUH power over more than one day in order to help balance supply and demand over protracted periods RIZLQGFDOP

Are things likely to change much in future? The characteristics of wind imply that whilst RQDYHUDJHLWFDQJHQHUDWHVLJQL¿FDQWDPRXQWVRIHOHFWULFLW\LQFRXQWULHVVXFKDV%ULWDLQWKHUHLV DYHU\VXEVWDQWLDOYDULDQFHDURXQGWKHDPRXQWSURGXFHG0RUHRYHUWKHUHLVDWLPHFRUUHODWLRQLQ generation that means periods of calm tend to occur together, as do periods which are exception-DOO\IDYRXUDEOHWRZLQGJHQHUDWLRQ QRWWKHPRVWZLQG\GD\VZKHQJHQHUDWLRQKDVWREHFXUWDLOHG EXWGD\VZLWKVLJQL¿FDQWZLQG ,IWKHHOHFWULFLW\JHQHUDWLRQV\VWHPUHOLHVWRDVLJQL¿FDQWH[WHQWRQ ZLQGLWQHHGVWR¿QGPHWKRGVRIFRYHULQJWKHSHULRGVZKHQZLQGLVQRWJHQHUDWLQJ,QSDUWLFXODU periods longer than a few hours are ill-suited to demand management tactics, because switching a UHIULJHUDWRURULPPHUVLRQKHDWHUR൵IRUVHYHUDOGD\VRUUHIUDLQLQJIURPFKDUJLQJ\RXUHOHFWULFFDU DUHXQOLNHO\WREHSUDFWLFDOSURSRVLWLRQV1RUWRWKHH[WHQWWKDWZLQGJHQHUDWLRQPD\EHORZDFURVV WKH(XURSHDQFRQWLQHQWIRUVHYHUDOGD\VXQGHUFHUWDLQFOLPDWHFRQGLWLRQVH[SHULHQFHGLQZLQWHUGRHV LQWHUFRQQHFWLRQSURYLGHDJRRGVROXWLRQ7KLVW\SHRIRSHUDWLRQKROGLQJSRZHURYHUVHYHUDOGD\V ZRXOG QRW DSSHDU SUR¿WDEOH RQ WKH EDVLV RI SUHVHQW SULFH SDWWHUQV ZLWKLQ VWRUDJH IDFLOLWLHV JLYHQ FXUUHQWDQGSURMHFWHGH൶FLHQF\UDWHVDQGPLJKWEHEHWWHUDGGUHVVHGE\JDVSODQWVFRQVWUXFWHGIRU WKHSXUSRVHIRUH[DPSOH

7ZRDOWHUQDWLYHVVXJJHVWWKHPVHOYHV7KH¿UVWLVWKDWSULFLQJSDWWHUQVZLOOFKDQJHVX൶-FLHQWO\WRPDNHLWZRUWKZKLOHWRVWRUHIRUORQJHUSHULRGVRQDQDUELWUDJHEDVLV7KHVHFRQGLVWKDW new means of incentivising longer term storage may need to be contemplated as an alternative WRKLJKHPLVVLRQGLHVHOJHQHUDWRUV7KHREYLRXVVROXWLRQKHUHLVIRUVWRUDJHWRHQWHUWKHFDSDFLW\ market, since storage in media such as compressed air energy storage is technically feasible for

SHULRGVLQH[FHVVRIDZHHNDQGDUJXDEO\DOVRVRFLDOO\IHDVLEOHDFFRUGLQJWRFDOFXODWLRQVE\%DUWRQ DQG7KRPVRQ  $WSUHVHQWWKHLQFHQWLYHVWRHQFRXUDJHWKLVDSSHDUQRWWREHSUHVHQWEXWWKH\ PD\HPHUJHLQIXWXUH

 $WWKHGLVWULEXWLRQOHYHOVPDOOVFDOHVWRUDJHIRUH[DPSOHLQEDWWHULHVFDQDOVRLPSURYHTXDO-LW\RISRZHUSURYLVLRQ

(21)

Analyzing the Potential Economic Value of Energy Storage  ACKNOWLEDGMENTS 7KHDXWKRUVZRXOGOLNHWRWKDQNVDQRQ\PRXVUHYLHZHUVDQGWKHVSHFLDOLVVXH¶VHGLWRU 3URIHVVRU'DYLG%URDGVWRFNIRULQVLJKWIXOFRPPHQWVZKLFKKDYHLPSURYHGWKHFODULW\DQGTXDOLW\RI WKHSDSHU7KH\DFNQRZOHGJHVXSSRUWIURPWKH(365&XQGHUJUDQW(3.0RQLFD*LXOLHWWL DOVRDFNQRZOHGJHVVXSSRUWIURPWKH(365&XQGHUJUDQWV(31DQG(35DQG

IURP 8.(5& XQGHU JUDQW 8.(5&))(OLVD7UXMLOOR%DXWH DOVR DFNQRZOHGJHV VXSSRUW IURP

WKH*HQHUDOLWDWGH&DWDOXQ\D 6*5 DQGWKH6SDQLVK0LQLVWU\RI(FRQRP\ (&2 50,1(&2)('(58( 7KHDXWKRUVZRXOGOLNHWRWKDQNSDUWLFLSDQWVWRWKHWKPHHWLQJ LQ ,QWHUQDWLRQDO (FRQRPLFV DW WKH 8QLYHUVLW\ -DXPH , LQ9LOODUHDO 6SDLQ LQ -XO\  IRU XVHIXO FRPPHQWVRQDSUHYLRXVYHUVLRQRIWKLVZRUNDQGVHYHUDODWWHQGHHVDWDVHPLQDUDWWKH8QLYHUVLW\ RI%DUFHORQDZKHUHWKLVZRUNZDVDOVRSUHVHQWHG0LFKDHO:DWHUVRQZRXOGOLNHWRWKDQNWKH&KDLU RI(QHUJ\6XVWDLQDELOLW\DWWKH8QLYHUVLW\RI%DUFHORQDIRULWVJHQHURXVKRVSLWDOLW\GXULQJKLVYLVLW LQ1RYHPEHU/XLJL*URVVLZLVKHVWRDFNQRZOHGJHWKH'HSDUWPHQWRI(FRQRPLFVDWWKH8QL-YHUVLW\RI:DUZLFNIRULWVKRVSLWDOLW\LQGL൵HUHQWSHULRGVGXULQJZKLFKPRVWRIWKH5VFULSWVXVHGLQ WKLVSDSHUZHUHZULWWHQ REFERENCES %DUWRQ-3DQG07KRPVRQ  µµ+LJK7HPSRUDO5HVROXWLRQ$QDO\VLVRI8.3RZHU6\VWHP8VHGWR'HWHUPLQHWKH2S-WLPDO$PRXQWDQG0L[RI(QHUJ\6WRUDJH7HFKQRORJLHV¶¶3UHVHQWDWLRQWR8.(QHUJ\6WRUDJH1RYHPEHU %DUEU\$0)$QMRVDQG('HODJH  ³5REXVWVHOIVFKHGXOLQJRIDSULFHPDNHUHQHUJ\VWRUDJHIDFLOLW\LQWKH1HZ <RUNHOHFWULFLW\PDUNHW´PLPHR+(&0RQWUHDO KWWSZHEKHFFDSDJHVHULFNGHODJH%DUEU\$QMRV'HODJH0D\SGI %UDGEXU\./3UDWVRQDQG'3DWLxR(FKHYHUUL  ³(FRQRPLFYLDELOLW\RIHQHUJ\VWRUDJHV\VWHPVEDVHGRQSULFH DUELWUDJHSRWHQWLDOLQUHDOWLPH86HOHFWULFLW\PDUNHWV´Applied Energy±KWWSVGRLRUJMDSHQ-HUJ\ &DUVRQ57DQG.1RYDQ  ³7KHSULYDWHDQGVRFLDOHFRQRPLFVRIEXONHOHFWULFLW\VWRUDJH´Journal of Environmental

Economics and Management  ±KWWSVGRLRUJMMHHP

&UXLVH-/)ODWOH\5*LEEHQVDQG6=DFKDU\  ³2SWLPDOFRQWURORIVWRUDJHLQFRUSRUDWLQJPDUNHWLPSDFWDQGZLWK HQHUJ\DSSOLFDWLRQV´DU;LYY

&UXLVH-/)ODWOH\DQG6=DFKDU\  ³,PSDFWRIVWRUDJHFRPSHWLWLRQRQHQHUJ\PDUNHW´DU;LY

(&2)<6  ³(QHUJ\6WRUDJH2SSRUWXQLWLHVDQG&KDOOHQJHV²$:HVW&RDVW3HUVSHFWLYH´:KLWH3DSHU>2QOLQH@$YDLO-DEOHIURPKWWSZZZHFRI\VFRP¿OHV¿OHVHFRI\VHQHUJ\VWRUDJHZKLWHSDSHUSGI>-DQXDU\@

(OH[RQ /WG 0DUNHW ,QGH[ 'H¿QLWLRQ 6WDWHPHQW YHUVLRQ   ZZZHOH[RQFRXNZSFRQWHQWXSORDGV 0,'6BYSGI

(VWHEDQ04=KDQJDQG$8WDPD  µµ(VWLPDWLRQRIWKHHQHUJ\VWRUDJHUHTXLUHPHQWRIDIXWXUHUHQHZDEOH HQHUJ\V\VWHPLQ-DSDQ¶¶Energy Policy±KWWSVGRLRUJMHQSRO

)ODWOH\/560DF.D\DQG0:DWHUVRQ  µµ2SWLPDOVWUDWHJLHVIRURSHUDWLQJHQHUJ\VWRUDJHLQDQDUELWUDJHPDUNHW¶¶

Journal of Dynamics and Games  ±KWWSVGRLRUJMGJ

*LXOLHWWL0/*URVVLDQG0:DWHUVRQ  µµ7KHHFRQRPLFYDOXHRIVWRUDJHHYLGHQFHIURPWKH8.¶¶8QLYHUVLW\RI %DUFHORQD&KDLURQHQHUJ\DQGVXVWDLQDELOLW\'RFXPHQWGH7UHEDOO1RYHPEHU *RZULVDQNDUDQ*65H\QROGDQG06DPDQR  µµ,QWHUPLWWHQF\DQGWKHYDOXHRIUHQHZDEOHHQHUJ\¶¶Journal of Polit-ical Economy  ±KWWSVGRLRUJ *URVVL/6+HLPDQG0:DWHUVRQ  µµ7KHLPSDFWRIWKH*HUPDQUHVSRQVHWRWKH)XNXVKLPDHDUWKTXDNH¶¶Energy Economics±KWWSVGRLRUJMHQHFR

*URVVL/DQG)1DQ  µµ5REXVWHVWLPDWLRQRIUHJLPHVZLWFKLQJPRGHOV¶¶,QAdvanced Statistical Models Data

Analy-sis,0RUOLQL09LFKLDQG70LQHUYD (GV FKDSWHU±%HUOLQ6SULQJHUKWWSVGRLRUJ

B

+XWFKLQVRQ$  8QSXEOLVKHG3K'7KHVLV8QLYHUVLW\RI:DUZLFN'HFHPEHU

/XQG+*6DOJL%(OPHJDDUGDQG$1$QGHUVHQ  µµ2SWLPDORSHUDWLRQVWUDWHJLHVRIFRPSUHVVHGDLUHQHUJ\VWRU-DJH &$(6 RQHOHFWULFLW\VSRWPDUNHWVZLWKÀXFWXDWLQJSULFHV¶¶Applied Thermal Engineering±KWWSVGRL RUJMDSSOWKHUPDOHQJ

(22)

The Energy Journal

1DVURODKSRXU ( -6 .D]HPSRXU + =DUHLSRXU DQG :' 5RVHKDUW   µµ6WUDWHJLF 6L]LQJ RI (QHUJ\ 6WRUDJH )D-FLOLWLHV LQ (OHFWULFLW\ 0DUNHWV¶¶ IEEE Transactions on Sustainable Energy    ± KWWSVGRLRUJ 767(

1HZEHU\'  µµ0LVVLQJPRQH\DQGPLVVLQJPDUNHWVUHOLDELOLW\FDSDFLW\DXFWLRQVDQGLQWHUFRQQHFWLRQ¶¶Energy Policy ±KWWSVGRLRUJMHQSRO

5HQHZDEOH(QHUJ\$VVRFLDWLRQ  µµ(QHUJ\6WRUDJHLQWKH8.$Q2YHUYLHZ¶¶1RYHPEHU>2QOLQH@$YDLODEOHIURP KWWSVZZZUHDQHWXSORDGUHDBXNBHQHUJ\BVWRUDJHBUHSRUWBQRYHPEHUBBB¿QDOSGI>-DQXDU\@

6LRVKDQVL 5 3 'HQKROP 7 -HQNLQ DQG - :HLVV   µµ(VWLPDWLQJ WKH YDOXH RI HOHFWULFLW\ VWRUDJH LQ 3-0 $UEL-WUDJH DQG VRPH ZHOIDUH H൵HFWV¶¶ Energy Economics    ± ,661  KWWSG[GRLRUJM HQHFR 6LRVKDQVL5  µµ:HOIDUH,PSDFWVRI(OHFWULFLW\6WRUDJHDQGWKH,PSOLFDWLRQVRI2ZQHUVKLS6WUXFWXUH¶¶The Energy Journal  ±KWWSVGRLRUJ,661(-9RO1R 6WHZDUG'*6DXU03HQHYDQG75DPVGHQ  µµ/LIHF\FOH&RVW$QDO\VLVRI+\GURJHQ9HUVXV2WKHU7HFKQRORJLHV IRU(OHFWULFDO(QHUJ\6WRUDJH1DWLRQDO5HQHZDEOH(QHUJ\/DERUDWRU\¶¶7HFKQLFDO5HSRUW15(/731RYHP-EHU 9DWDQL%%&KRZGKXU\6'HKJKDQDQG1$PMDG\  µµ$FULWLFDOUHYLHZRIUREXVWVHOIVFKHGXOLQJIRUJHQHUDWLRQ FRPSDQLHVXQGHUHOHFWULFLW\SULFHXQFHUWDLQW\¶¶International Journal of Electrical Power & Energy Systems± KWWSVGRLRUJMLMHSHV

:DODZDONDU5-$SWDQG50DQFLQL  µµ(FRQRPLFVRIHOHFWULFHQHUJ\VWRUDJHIRUHQHUJ\DUELWUDJHDQGUHJXODWLRQLQ 1HZ<RUN¶¶Energy Policy  ±KWWSVGRLRUJMHQSRO

=D¿UDNLV'.-&KDOYDW]LV*%DLRFFKLDQG*'DVNDODNLV  µµ7KHYDOXHRIDUELWUDJHIRUHQHUJ\VWRUDJH(YLGHQFH IURP(XURSHDQHOHFWULFLW\PDUNHWV¶¶Applied Energy±KWWSVGRLRUJMDSHQHUJ\

Figura

Figure 1: The characteristics of wind generation (Year 2015)
Figure 3: Wholesale prices in the week starting 13 January 2014 (Monday)
Figure 4: An example of a fairly typical daily pattern

Riferimenti

Documenti correlati

Induction of p21WAF is usually associated to the cell cycle control at the G1/S checkpoint; however, upregulation of p21WAF and induction of S-phase arrest it is not unprecedented

Keywords: Dirichlet space, Complete Nevanlinna Property, Hilbert-Schmidt operators, Carleson measures MSC: 30H25, 47B35..

The development of cash flow patterns for individual groups of stakeholders with an interest in the total value generated by the company between 2009 and 2015 is illustrated in

According to the Memorandum between the Ministry of Energy of the Russian Federation and the Ministry of Energy and Mineral Resources of Mongolia dated October 14, 2010, the

So far, in order to minimise the impact of varying demand on the operation of power plants, excess energy has mainly been stored in the form of gravitational potential energy

The system is comprised of a measuring chamber filled with the tested granular material, the heat supply unit of a boiler with a thermostatic temperature control system for the flow

An analysis of the asymmetries in different regions of the phase space is made for the first time and the results are consistent with CP conservation. Relatively