A Market Feedback Framework for Improved Estimates of the Arbitrage Value of Energy Storage Using Price-Taker Models

Michael Emmanuel, Paul Denholm

Research output: Contribution to journalArticlepeer-review

10 Scopus Citations

Abstract

Price-taker (PT) models are often used to assess the potential value or revenue of energy arbitrage opportunities for energy storage in wholesale markets. But as greater amounts of energy storage are deployed on the grid, current PT models fail to predict the effects that energy storage itself can have on market prices. This can lead to an overestimation of the economic value of storage and an inability to capture price suppression. In this paper, we propose the use of a modified PT model to simulate the impact of increased storage deployment on energy prices and the resulting impact on revenue. Our method uses a gradient-boosting regressor to estimate the impact on prices, and we apply our method on historical price data from the PJM and California Independent System Operator wholesale markets. We use this approach to explore possible causes of electricity price suppression that occur from storage capacity additions, which is generally not possible with PT models.

Original languageAmerican English
Article number118250
Number of pages12
JournalApplied Energy
Volume310
DOIs
StatePublished - 2022

Bibliographical note

Publisher Copyright:
© 2021

NREL Publication Number

  • NREL/JA-5D00-79184

Keywords

  • Arbitrage
  • Electricity price suppression
  • Energy storage
  • Gradient boosting regressor
  • Price-taker model

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