Analysis of Energy Storage Participation Policies in an Electricity Market Environment

Abstract

As an essential technology to solve renewable energy absorption, energy storage plays a vital role in the new power system. However, the cost recovery of energy storage is complex, and government subsidies are still needed at this stage. To save government investment and improve the economic benefits of energy storage, the authorities need to choose an appropriate technology route so that the market can better allocate energy storage resources. The paper studies the current situation and policies of energy storage participation in the electricity market and provides essential experience for developing the regional electricity market in China. The main goal of energy storage is to maximize the portfolio’s profitability and find a balance between market revenues, overall storage costs, and reliable operations. The results of this paper suggest that the relevant authorities should clarify the main identity of energy storage in the electricity market and revise the mechanisms to help it participate in the ancillary services market, and should allow large storage plants and aggregated distributed storage to participate in each market segment, allowing them to trade flexibly in each market to exploit their flexibility and system value fully.