Economic value of Li-ion energy storage system in frequency regulation application from utility firm's perspective in Korea

Wonchang Hur, Yongma Moon, Kwangsup Shin, Wooje Kim, Suchul Nam, Kijun Park

Research output: Contribution to journalArticlepeer-review

17 Scopus citations

Abstract

Energy Storage Systems (ESSs) have recently been highlighted because of their many benefits such as load-shifting, frequency regulation, price arbitrage, renewables, and so on. Among those benefits, we aim at evaluating their economic value in frequency regulation application. However, unlike previous literature focusing on profits obtained from participating in the ancillary service market, our approach concentrates on the cost reduction from the perspective of a utility firm that has an obligation to pay energy fees to a power exchange. More specifically, we focus on the payments between the power exchange market and the utility firm as a major source of economic benefits. The evaluation is done by costbenefit analysis (CBA) with a dataset of the Korean market while considering operational constraint costs as well as scheduled energy payments, and a simulation algorithm for the evaluation is provided. Our results show the potential for huge profits to be made by cost reduction. We believe that this research can provide a guideline for a utility firm considering investing in ESSs for frequency regulation application as a source of cost reduction.

Original languageEnglish
Pages (from-to)5000-5017
Number of pages18
JournalEnergies
Volume8
Issue number6
DOIs
StatePublished - 2015

Keywords

  • Ancillary services
  • Economic value
  • Energy storage system
  • Frequency regulation
  • Utility firm

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