A Simple Operating Strategy of Small-Scale Battery Energy Storages for Energy Arbitrage under Dynamic Pricing Tariffs

Enrico Telaretti,Luigi Dusonchet,Mariano Ippolito

doi:10.3390/en9010012

Abstract

Price arbitrage involves taking advantage of an electricity price difference, storing electricity during low-prices times, and selling it back to the grid during high-prices periods. This strategy can be exploited by customers in presence of dynamic pricing schemes, such as hourly electricity prices, where the customer electricity cost may vary at any hour of day, and power consumption can be managed in a more flexible and economical manner, taking advantage of the price differential. Instead of modifying their energy consumption, customers can install storage systems to reduce their electricity bill, shifting the energy consumption from on-peak to off-peak hours. This paper develops a detailed storage model linking together technical, economic and electricity market parameters. The proposed operating strategy aims to maximize the profit of the storage owner (electricity customer) under simplifying assumptions, by determining the optimal charge/discharge schedule. The model can be applied to several kinds of storages, although the simulations refer to three kinds of batteries: lead-acid, lithium-ion (Li-ion) and sodium-sulfur (NaS) batteries. Unlike literature reviews, often requiring an estimate of the end-user load profile, the proposed operation strategy is able to properly identify the battery-charging schedule, relying only on the hourly price profile, regardless of the specific facility’s consumption, thanks to some simplifying assumptions in the sizing and the operation of the battery. This could be particularly useful when the customer load profile cannot be scheduled with sufficient reliability, because of the uncertainty inherent in load forecasting. The motivation behind this research is that storage devices can help to lower the average electricity prices, increasing flexibility and fostering the integration of renewable sources into the power system.

Highlights

Electricity customers will face significant challenges in the near future due to the most recent developments in the energy market sector
Unlike the studies reported in the literature, often requiring an estimate of the end-user load profile, the proposed operation strategy is able to properly identify, for each daily period, the charge/discharge hours relying only on the hourly spot market price profile, regardless of the specific facility’s consumption
This could be useful when the customer load profile cannot be scheduled with sufficient reliability because of the uncertainty inherent in load forecasting

Summary

Introduction

Electricity customers will face significant challenges in the near future due to the most recent developments in the energy market sector. These changes have been mainly driven by the increasing penetration of renewable and distributed energy sources in the power system, which can positively contribute to a reduction of CO2 emissions. The electricity price varies stochastically from one day to the and systematically between seasons. The marginal cost of producing energy has become much more volatile in the last decade, mainly due to the recent moves toward competitive liberalized markets

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