The impact of electricity storage on wholesale electricity prices

Nyamdash, Batsaikhan and Denny, Eleanor (2011): The impact of electricity storage on wholesale electricity prices.

Abstract

This paper analyzes the impact of electricity storage on the production cost of a power system and the marginal cost of electricity (electricity price) using a unit commitment model. Also real world data has been analyzed to verify the e®ect of storage operation on the electricity price using econometric techniques. The unit commitment model found that the deployment of a storage system reduces the fuel cost of the power system but increases the average electricity price through its e®ect on the power system operation. However, the reduction in the production cost was found to be less than the increase in the consumer's cost of electricity resulting in a net increase in costs due to storage. Di®erent storage and CO2 price scenarios were investigated to study the sensitivity of these results. The regression analysis supports the unit commitment results and ¯nds that the presence of storage increases average wholesale electricity prices for the case study system.

• Item Type: MPRA Paper
• Language: English
• Keywords: Electricity storage; Electricity price; Production cost
• Subjects: P - Economic Systems > P2 - Socialist Systems and Transitional Economies > P28 - Natural Resources ; Energy ; Environment; D - Microeconomics > D4 - Market Structure, Pricing, and Design; Q - Agricultural and Natural Resource Economics ; Environmental and Ecological Economics > Q4 - Energy

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