Abstract
Even though electricity is one of the major drivers for economic growth, balancing the demand and supply of the utility service on the grid infrastructure, particularly during peak demand periods, presents enormous challenges to industry players. Pumped hydro energy storage (PHES), which is an example of electrical energy storage systems and possesses the largest energy storage capacity, has for years been deployed to successfully address this challenge. Due to the short period of operation of PHES, a specialized market pricing and regulations scheme is needed to ensure profitability. This chapter evaluates the varied market structures under which PHES operates with the focus of determining the impact of the market structures on PHES. The findings of this chapter reveal that though the liberalized market promotes the development of PHES projects, it could as well diminish electricity prices on the market, thus reducing the profitability of PHES. Also, majority of the existing PHES plants were commissioned under some form of monopolized electricity market structure. Again, it has been observed that countries such as China, India, Switzerland, and Japan, which have witnessed major breakthroughs in the development of PHES, have their electricity markets being partially liberalized. In a nutshell, to foster the development of the PHES industry, robust, transparent, as well as detailed market regulations, without any ambiguity, are mandatory.
Published Version
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