optimizing investments in energy storage · case iii: merchant eso perspective • eso chooses the...
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OptimizingInvestmentsinEnergyStorage
DanielKirschenUniversityofWashington
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Acknowledgements
• PhDstudentsandpostdocs:– Yury Dvorkin(nowatNYU)– Ricardo Fernandez-Blanco (nowattheEuropeanJRC)– HrvojePandzic(nowattheUniversityofZagreb)– Bolun Xu– YishenWang– TingQiu (soontobeatERCOT)
• SandiaNationalLab:– CesarSilvaMonroy– Jean-PaulWatson
• Funding:
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Goal
• Optimizelocationandsizeofenergystorage• Maximizebenefitsfromspatio-temporalarbitrage
ØConsidercongestionintransmissionØConsideruncertaintyonrenewablegeneration
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Optimalfromwhichperspective?
SystemOperator(SO)
EnergyStorageOwner(ESO)
MaintainReliability
MaximizeWelfare
MaximizeProfit
RecoverInvestments
UndefinedrevenueSystemexpansion
UndefinedvalueEnergy-limitedresource
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Optimalfromwhichperspective?
• Perspectiveleadstodifferentproblemformulations– Problem1:SOperspective– Problem2:MixedSO-ESOperspective– Problem3:ESOwithtransmissionexpansion
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ProblemI:SOPerspective
• SOinvestsinstoragetomaximizewelfare– Benevolent monopolist
• SO’sobjective:Minimize(operatingcost+investmentcostinenergystorage)
• Subjecttoconstraintson:– Investments inenergystorage– Operationofenergystorage– Systemoperation:generationandtransmission limits
• Considerstochasticrenewablegeneration• Considercongestioninthetransmissionnetwork(dcmodel)• Formulationscalabletosystemswith1000’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-yearlifetime• 5%annualinterestrate
• 2024WECCsystem– 240buses,448lines,71thermalgenerators– 32windpowerand7solarpowerplants
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SOPerspective:OptimalSitingandSizing
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SOPerspective:OptimalSitingandSizing
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SOPerspective:OptimalSitingandSizing
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SOPerspective:OptimalSitingandSizing
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SOPerspective:ImpactoftheCapitalCost
• Theinvestmentcostistheprimarydriverofsizingdecisions– Asthecapitalcostincreases, theinstalledstoragecapacitydecreases
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SOPerspective:ImpactofWindSpillage
• Rate-of-return(Profit/Cost)issensitivetovalueofwindspillage
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VoRS:ValueofRenewableSpillage
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SOPerspective:ImpactofWindSpillage
• Insufficientprofitfromspatio-temporalarbitrageunderthehighcapitalcostscenario
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ProblemII:MixedSO+ESOPerspective
• Optimallocationandsizeofmerchant energystorageinacentrallyoperatedsystem
• Modifiedintegratedoptimization– Minimize(operatingcost+costofinvestment instorage)– Subjecttoconstraintsonoperationandinvestments
• Addaminimumprofitconstraint:– Lifetimenetrevenue≥ 𝜒 ⋅Investment Cost– 𝜒 isagivenrateofreturn
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ProblemII:Bilevel Formulation
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DecisionsonStorage
InvestmentsUpperLevel:
OperationforTypicalDaysLowerLevel:
Storagebids/offers
LMPs,acceptedbids/offers
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ProblemII:TestSystemandData
• 8-zonemodeloftheISONEsystem– 8marketzones– 13transmission corridors– 76thermalgenerators– 2030renewable portfolio&load
expectations
• ARPA-eprojectionsonstoragecostandcharacteristics
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ProblemII:ImpactoftheRateofReturn
• LifetimeProfit≥ 𝜒 ⋅InvestmentCost– If𝜒 > 1 → Storageinvestment isprofitable– If𝜒 = 0 → SamesolutionasproblemI
• Profitconstraintaffectsboththesitingandsizingdecisions– Reduction inthetotalenergycapacity
installed– Morediversity inlocations
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ProblemII:ImpactoftheCapitalCost
• Resultsarestronglyaffectedbythecapitalcost
• Totalinstalledcapacityofstoragedecreaseswhencostincreases
• Underthehighestcapitalcostscenario,storageisplacedatthebuswiththehighestintra-dayLMPvariability
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CaseIII:MerchantESOPerspective
• ESOchooses theoptimal locationsandsizes thatmaximize itsprofits• SOminimizes thesystemoperatingcost• Effectoftransmission expansion?
• Formulation:– ESOmaximizes(LifetimenetrevenueofES– Costofinvestment instorage)– SOminimizes (Operatingcost+Costofinvestment intransmissionexpansion)
• Constraints– Systemoperation– Investmentsinenergystorage– Profitability constraint:Revenue≥ 𝜒 ⋅InvestmentCost
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Trilevel Formulation
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MiddleLevel
TransmissionExpansion
LowerLevel
MarketClearing
ExpansionDecisions
Dispatchdecisions
Storagebids/offers
UpperLevelMerchantStorage
Investments
LMPs,acceptedstoragebids/offers
SolvedusingaCCG-typedecomposition
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ProblemIII:TestSystemandData
• Threestorageinvestmentcostscenarios(ARPA-E):– High:$75/kWhand$1300/kW– Medium:$50/kWhand$1000/kW– Low:$20/kWhand$500/kW
• Round-tripefficiencyof0.81• 10-yearlifetime• 5%annualinterestrate
• 2024WECCsystem– 240buses,448lines,71thermalgenerators– 32windpowerand7solarpowerplants
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EffectofTransmissionExpansion
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Expandlinesconnectedtostorageonly
Expandalllines
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Comparison
• Sitingof10batteriesforproblemsI, II,and IIIonthesameWECC-240systemwiththesameinputdata:
• Only3locationsarethesameforallthreeproblems• ProblemsIIandIIIhave7outof10commonlocations• BestlocationsfromtheSO’sperspectivearenotnecessarily
thebestlocationsfromamerchantperspective
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Summary
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ProblemI:SOPerspective
ProblemII:MixedSO- ESOPerspective
ProblemIII:ESOPerspective&TransmissionExpansion
Merchantperspective
Applicabilitytoamarketenvironment
Modelingcomplexity
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Openresearchquestions:Storageasatemporarymeasure
• Batterylifetime<Transmissionlinelifetime• NeedtooptimizeinvestmentsovertheyearsØCombinatorialexplosionØTremendousuncertaintyoversystemevolution
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Openresearchquestions:Multipleusesofstorage
• Notjustspatio-temporalarbitrage– Frequencyregulation– Reserve– Peakshaving
• Operationalproblem– Howdowecombinetheseapplications?– Stateofchargeconstraints–Multiplebeneficiaries
• Planningproblem
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Openresearchquestions:Batterydegradation
• Complexphenomenon• Dependsonthechemistryofthebattery:• Overcharge• Overdischarge• Celltemperature• Cycleaveragestateofcharge(SoC)• Currentrate(C-rate)• Cycledepth
• Howtoincorporatedegradationinoptimaloperationstrategies?
• Impactoninvestmentdecisions?
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References
• H.Pandžić,Y.Wang,T.Qiu,Y.DvorkinandD.Kirschen,"Near-OptimalMethodforSitingandSizingofDistributedStorageinaTransmissionNetwork," IEEETransactionsonPowerSystems,2015.
• Y.Dvorkin,R.Fernandez-Blanco,D.Kirschen,H.Pandzic,J.P.WatsonandC.A.Silva-Monroy,"EnsuringProfitabilityofEnergyStorage," IEEETransactionsonPowerSystems,2016
• R.Fernandez-Blanco,Y.Dvorkin,B.Xu,Y.WangandD.Kirschen,"EnergyStorageSitingandSizingintheWECCAreaandtheCAISOSystem,"TechnicalReport,UniversityofWashington,2016.
• R.Fernandez- Blanco,Y.Dvorkin,B.Xu,YWang,D.S.Kirschen,“StochasticEnergyStorageSitingandSizing:AWECCCaseStudy”,IEEETransactionsonSustainableEnergy,earlyaccess
• Y.Dvorkin,R.Fernandez-Blanco,D.Kirschen,Y.Wang,B.Xu,H.Pandzic,J.P.WatsonandC.A.Silva-Monroy,"Co-planningofInvestmentsinTransmissionandMerchantEnergyStorage," IEEETransactionsonPowerSystems,2017
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