TY - JOUR
T1 - The value of energy storage in South Korea's electricity market
T2 - A Hotelling approach
AU - Shcherbakova, Anastasia
AU - Kleit, Andrew
AU - Cho, Joohyun
N1 - Funding Information:
This research was supported by a Grant from Korea Institute of Energy Technology Evaluation and Planning (KETEP), funded by the Korea government Ministry of Knowledge Economy (No. 20118530020010 ).
PY - 2014/7/15
Y1 - 2014/7/15
N2 - In this study we evaluate the economic potential for energy arbitrage by simulating operation and resulting profits of a small price-taking storage device in South Korea's electricity market. As demand for electricity continues to grow, maintaining a balanced power system at all times has become more challenging in Korea and other developed nations. Along with demand response programs and increased renewable energy utilization, energy storage devices may provide a viable way to contribute to diurnal peak demand shaving. In some parts of the U.S. storage arbitrage has proven to be profitable. Treating a battery's ability to charge and discharge as a scarce resource, we apply the Hotelling (1931) rule to determine a strategy for maximizing the value of the battery. Results show that present market conditions in South Korea do not provide sufficient economic incentives for energy arbitrage using sodium-sulfur (NaS) or lithium-ion (Li-ion) batteries, with the capital cost of the storage devices exceeding potential revenues.
AB - In this study we evaluate the economic potential for energy arbitrage by simulating operation and resulting profits of a small price-taking storage device in South Korea's electricity market. As demand for electricity continues to grow, maintaining a balanced power system at all times has become more challenging in Korea and other developed nations. Along with demand response programs and increased renewable energy utilization, energy storage devices may provide a viable way to contribute to diurnal peak demand shaving. In some parts of the U.S. storage arbitrage has proven to be profitable. Treating a battery's ability to charge and discharge as a scarce resource, we apply the Hotelling (1931) rule to determine a strategy for maximizing the value of the battery. Results show that present market conditions in South Korea do not provide sufficient economic incentives for energy arbitrage using sodium-sulfur (NaS) or lithium-ion (Li-ion) batteries, with the capital cost of the storage devices exceeding potential revenues.
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U2 - 10.1016/j.apenergy.2014.03.046
DO - 10.1016/j.apenergy.2014.03.046
M3 - Article
AN - SCOPUS:84898893035
SN - 0306-2619
VL - 125
SP - 93
EP - 102
JO - Applied Energy
JF - Applied Energy
ER -
