Impacts of Storage Dispatch on Revenue in Electricity Markets

As electricity storage deployments grow—due to decreasing costs and increasing grid flexibility requirements—market frameworks governing their dispatch and remuneration are a growing area of interest and importance. For example, the recent Federal Energy Regulatory Commission Order 841 instructs independent system operators to remove barriers of entry for storage assets. This paper reviews electricity market rules to inform an accurate representation of storage bidding behavior in day-ahead (DA) and real-time (RT) electricity markets. Storage dispatch strategies are explored using production cost and price-taker models to address two related research questions: (1) will storage assets receive the highest remuneration by bidding into DA markets, bidding into RT markets, or redispatching bids in both markets and (2) how accurate must forecast information be for a redispatch strategy to improve remuneration? Results show that with sufficient ability to forecast prices, redispatching a DA schedule in the RT takes advantage of both markets: a longer dispatch horizon as well as more volatile prices.