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Op#mizingInvestmentsinEnergyStorage

DanielKirschenUniversityofWashington

Acknowledgements

•  PhDstudentsandpostdocs:–  YuryDvorkin(nowatNYU)–  RicardoFernandez-Blanco(nowattheEuropeanJRC)–  HrvojePandzic(nowattheUniversityofZagreb)–  BolunXu–  YishenWang–  TingQiu(soontobeatERCOT)

•  SandiaNaSonalLab:–  CesarSilvaMonroy–  Jean-PaulWatson

•  Funding:

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Goal

•  OpSmizelocaSonandsizeofenergystorage•  MaximizebenefitsfromspaSo-temporalarbitrage

Ø ConsidercongesSonintransmissionØ ConsideruncertaintyonrenewablegeneraSon

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OpSmalfromwhichperspecSve?

SystemOperator(SO)

EnergyStorageOwner(ESO)

MaintainReliability

MaximizeWelfare

MaximizeProfit

RecoverInvestments

UndefinedrevenueSystemexpansion

UndefinedvalueEnergy-limitedresource

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OpSmalfromwhichperspecSve?

•  PerspecSveleadstodifferentproblemformulaSons– Problem1:SOperspecSve– Problem2:MixedSO-ESOperspecSve– Problem3:ESOwithtransmissionexpansion

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ProblemI:SOPerspecSve

•  SOinvestsinstoragetomaximizewelfare–  Benevolentmonopolist

•  SO’sobjecSve:Minimize(operaSngcost+investmentcostinenergystorage)

•  Subjecttoconstraintson:–  Investmentsinenergystorage–  OperaSonofenergystorage–  SystemoperaSon:generaSonandtransmissionlimits

•  ConsiderstochasScrenewablegeneraSon•  ConsidercongesSoninthetransmissionnetwork(dcmodel)•  FormulaSonscalabletosystemswith1000’sofbuses

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ProblemI:TestSystemandData

•  Threestorageinvestmentcostscenarios(ARPA-E):–  High:$75/kWhand$1300/kW–  Medium: $50/kWhand$1000/kW–  Low: $20/kWhand$500/kW

•  Round-tripefficiencyof0.81•  10-yearlifeSme•  5%annualinterestrate

•  2024WECCsystem–  240buses,448lines,71thermalgenerators–  32windpowerand7solarpowerplants

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SOPerspecSve:OpSmalSiSngandSizing

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SOPerspecSve:OpSmalSiSngandSizing

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SOPerspecSve:OpSmalSiSngandSizing

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SOPerspecSve:OpSmalSiSngandSizing

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SOPerspecSve:ImpactoftheCapitalCost

•  Theinvestmentcostistheprimarydriverofsizingdecisions–  Asthecapitalcostincreases,theinstalledstoragecapacitydecreases

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SOPerspecSve:ImpactofWindSpillage

•  Rate-of-return(Profit/Cost)issensiSvetovalueofwindspillage

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VoRS:ValueofRenewableSpillage

SOPerspecSve:ImpactofWindSpillage

•  InsufficientprofitfromspaSo-temporalarbitrageunderthehighcapitalcostscenario

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ProblemII:MixedSO+ESOPerspecSve

•  OpSmallocaSonandsizeofmerchantenergystorageinacentrallyoperatedsystem

•  ModifiedintegratedopSmizaSon–  Minimize(operaSngcost+costofinvestmentinstorage)–  SubjecttoconstraintsonoperaSonandinvestments

•  Addaminimumprofitconstraint:

–  LifeSmenetrevenue≥𝜒⋅InvestmentCost

– 𝜒isagivenrateofreturn

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ProblemII:BilevelFormulaSon

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DecisionsonStorage

InvestmentsUpperLevel:

OperaSonforTypicalDaysLowerLevel:

Storagebids/offers

LMPs,acceptedbids/offers

ProblemII:TestSystemandData

•  8-zonemodeloftheISONEsystem–  8marketzones–  13transmissioncorridors–  76thermalgenerators–  2030renewableporoolio&load

expectaSons

•  ARPA-eprojecSonsonstoragecostandcharacterisScs

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ProblemII:ImpactoftheRateofReturn

•  LifeSmeProfit≥𝜒⋅InvestmentCost

–  If𝜒>1→Storageinvestmentisprofitable

–  If𝜒=0→Same solution as problem I

•  ProfitconstraintaffectsboththesiSngandsizingdecisions–  ReducSoninthetotalenergycapacity

installed–  MorediversityinlocaSons

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ProblemII:ImpactoftheCapitalCost

•  Resultsarestronglyaffectedbythecapitalcost

•  Totalinstalledcapacityofstoragedecreaseswhencostincreases

•  Underthehighestcapitalcostscenario,storageisplacedatthebuswiththehighestintra-dayLMPvariability

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CaseIII:MerchantESOPerspecSve

•  ESOchoosestheopSmallocaSonsandsizesthatmaximizeitsprofits•  SOminimizesthesystemoperaSngcost•  Effectoftransmissionexpansion?

•  FormulaSon:–  ESOmaximizes(LifeSmenetrevenueofES–Costofinvestmentinstorage)–  SOminimizes(OperaSngcost+Costofinvestmentintransmissionexpansion)

•  Constraints–  SystemoperaSon–  Investmentsinenergystorage

–  Profitabilityconstraint:Revenue≥𝜒⋅InvestmentCost

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TrilevelFormulaSon

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MiddleLevel

TransmissionExpansion

LowerLevel

MarketClearing

ExpansionDecisions

Dispatchdecisions

Storagebids/offers

UpperLevelMerchantStorage

Investments

LMPs,acceptedstoragebids/offers

SolvedusingaCCG-typedecomposiSon

ProblemIII:TestSystemandData

•  Threestorageinvestmentcostscenarios(ARPA-E):–  High:$75/kWhand$1300/kW–  Medium:$50/kWhand$1000/kW–  Low:$20/kWhand$500/kW

•  Round-tripefficiencyof0.81•  10-yearlifeSme•  5%annualinterestrate

•  2024WECCsystem–  240buses,448lines,71thermalgenerators–  32windpowerand7solarpowerplants

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EffectofTransmissionExpansion

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Expandlinesconnectedtostorageonly

Expandalllines

Comparison

•  SiSngof10bareriesforproblemsI,II,andIIIonthesameWECC-240systemwiththesameinputdata:

•  Only3locaSonsarethesameforallthreeproblems•  ProblemsIIandIIIhave7outof10commonlocaSons•  BestlocaSonsfromtheSO’sperspecSvearenotnecessarily

thebestlocaSonsfromamerchantperspecSve

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Summary

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ProblemI:SOPerspec#ve

ProblemII:MixedSO-ESOPerspec#ve

ProblemIII:ESOPerspec#ve&TransmissionExpansion

MerchantperspecSve

Applicabilitytoamarketenvironment

Modelingcomplexity

OpenresearchquesSons:Storageasatemporarymeasure

•  BarerylifeSme<TransmissionlinelifeSme•  NeedtoopSmizeinvestmentsovertheyearsØ CombinatorialexplosionØ TremendousuncertaintyoversystemevoluSon

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OpenresearchquesSons:MulSpleusesofstorage

•  NotjustspaSo-temporalarbitrage– FrequencyregulaSon– Reserve– Peakshaving

•  OperaSonalproblem– HowdowecombinetheseapplicaSons?– Stateofchargeconstraints– MulSplebeneficiaries

•  Planningproblem

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OpenresearchquesSons:BarerydegradaSon

•  Complexphenomenon•  Dependsonthechemistryofthebarery:•  Overcharge•  Overdischarge•  Celltemperature•  Cycleaveragestateofcharge(SoC)•  Currentrate(C-rate)•  Cycledepth

•  HowtoincorporatedegradaSoninopSmaloperaSonstrategies?

•  Impactoninvestmentdecisions?

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References

•  H.Pandžić,Y.Wang,T.Qiu,Y.DvorkinandD.Kirschen,"Near-OpSmalMethodforSiSngandSizingofDistributedStorageinaTransmissionNetwork,"IEEETransac*onsonPowerSystems,2015.

•  Y.Dvorkin,R.Fernandez-Blanco,D.Kirschen,H.Pandzic,J.P.WatsonandC.A.Silva-Monroy,"EnsuringProfitabilityofEnergyStorage,"IEEETransac*onsonPowerSystems,2016

•  R.Fernandez-Blanco,Y.Dvorkin,B.Xu,Y.WangandD.Kirschen,"EnergyStorageSiSngandSizingintheWECCAreaandtheCAISOSystem,"TechnicalReport,UniversityofWashington,2016.

•  R.Fernandez-Blanco,Y.Dvorkin,B.Xu,YWang,D.S.Kirschen,“StochasScEnergyStorageSiSngandSizing:AWECCCaseStudy”,IEEETransacSonsonSustainableEnergy,earlyaccess

•  Y.Dvorkin,R.Fernandez-Blanco,D.Kirschen,Y.Wang,B.Xu,H.Pandzic,J.P.WatsonandC.A.Silva-Monroy,"Co-planningofInvestmentsinTransmissionandMerchantEnergyStorage,"IEEETransac*onsonPowerSystems,2017

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