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Analyzing the potential economic value of energy storage

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journal contribution
posted on 17.07.2018, 13:36 by Monica GiuliettiMonica Giulietti, Luigi Grossi, Elisa Trujillo-Baute, Michael Waterson
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 dayahead generates profits in the British context. The paper sets out the potential problems as the market moves to absorb increasing amounts of wind, then characterises 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 over a relatively few hours. It argues that additional incentives may need to be put into place in order to render storage over relatively longer periods more attractive and to deliver broader social benefits which are unlikely to be generated and captured as a result of purely commercial considerations.

Funding

The authors acknowledge support from the EPSRC under grant EP/K002228. Monica Giulietti also acknowledges support from the EPSRC under grants EP/N001745/1 and EPR062258/1 and from UKERC under grant UKERC/FF3/3. Elisa Trujillo-Baute also acknowledges support from the Generalitat de Catalunya (2015-SGR-531) and the Spanish Ministry of Economy (ECO2015-69107-R, MINECO/FEDER, UE).

History

School

  • Business and Economics

Department

  • Economics

Published in

Energy Journal

Citation

GIULIETTI, M. ... et al, 2018. Analyzing the potential economic value of energy storage. Energy Journal, 39 (SI1), pp.101-122

Publisher

International Association for Energy Economics

Version

NA (Not Applicable or Unknown)

Publisher statement

This work is made available according to the conditions of the Creative Commons Attribution 4.0 International (CC BY 4.0) licence. Full details of this licence are available at: http://creativecommons.org/licenses/ by/4.0/

Acceptance date

04/05/2018

Publication date

2018

Notes

This article was published in the journal as Open Access under a Creative Commons Attribution 4.0 International (CC BY 4.0) licence.

ISSN

0195-6574

eISSN

1944-9089

Language

en