Economic value and government compensation calculative method of energy storage system

Abstract

Energy storage system (ESS) has recently been highlighted because of their many benefits such as high operation reliability, fast and accurate response ability, environmentally friendly, and so on. In power system applications, ESS can play a role in either energy management or power quality enhancement. Among the ancillary services provided by ESS such as frequency regulation, peak regulation, reserve capacity, black start, and so on, we aim at evaluating the economic value in reserve capacity application and designing economic compensatory method to make sure of reasonable profits of ESS investors. More specifically, the costs and benefits of ESS in the distribution network are evaluated. In order to improve the income of the individual investors of ESS, the government can provide economic compensation for investors from two aspects: compensation for unit reserve capacity, and compensation for investment cost. The minimum compensation standards of the two aspects are calculated. When the ESS is dispatched by the grid company, except for the government economic compensation, the grid company should pay for the investors and the payment is determined based on the grid company's economic profits. Finally, an actual ESS in Shanghai is taken as the example to calculate the economic compensation offered by the government, and the calculative results verify the rationality of the proposed method of government economic compensation for energy storage investors.