Feasibility Analysis of Behind-the-Meter Energy Storage System According to Public Policy on an Electricity Charge Discount Program

Byuk-Keun Jo,Gilsoo Jang,Seungmin Jung

doi:10.3390/su11010186

Byuk-Keun Jo, Gilsoo Jang + Show 1 more

Open Access

https://doi.org/10.3390/su11010186

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Journal: Sustainability	Publication Date: Jan 1, 2019
Citations: 14	License type: CC BY 4.0

Affiliation: Korea University, Hanbat National University

Abstract

Energy storage systems are crucial in dealing with challenges from the high-level penetration of renewable energy, which has inherently intermittent characteristics. For this reason, various incentive schemes improving the economic profitability of energy storage systems are underway in many countries with an aim to expand the participation rate. The electricity charge discount program, which was introduced in 2015 in Korea, is one of the policies meant to support the economic feasibility of demand-side energy storage systems. This paper quantitatively evaluated the impact of the electricity charge discount program on the economic feasibility of behind-the-meter energy storage systems. In this work, we first summarized how electricity customers can benefit from behind-the-meter energy storage systems. In addition, we represented details of the structure that make up the electricity charge discount program, i.e., how the electricity charge is discounted through the discount scheme. An optimization problem that establishes a charge and discharge schedule of an energy storage system to minimize each consumer’s electricity expenditure was defined and formulated as well. The case study results indicated that the electricity charge discount program has improved the profitability of behind-the-meter energy storage systems, and this improved profitability led to investment in behind-the-meter energy storage systems in Korea. As a result of the electricity charge discount program, Korea’s domestic demand side energy storage system market size, which was only 27 billion dollars in 2015 in Korea, has grown to 825 billion dollars in 2018.

Highlights

In the 2016 Paris Climate Change Agreement, South Korea committed to a 37% reduction target by 2030 [1]
Based on the actual case of installing 250 kW and 1000 kWh energy storage system (ESS) at the contract power of a 2500 kW complex center, we examined whether the ESS electricity charge discount program (ECDP), the incentive policy for the expansion of the demand side ESS, acted as intended by the Korean government
This paper shows that public policy to support the profitability of behind-the-meter ESS in Korea drives increased installation in demand-side ESSs

Summary

Introduction

In the 2016 Paris Climate Change Agreement, South Korea committed to a 37% reduction target by 2030 [1]. In order to achieve this, Korea announced the 3020 Renewable Energy Implementation Plan on December 2017 [2,3]. The renewable portfolio standard (RPS) was strengthened, while the proportion of renewable energy generation was increased, and the aging coal plant shut down plan was begun in Korea [2,4]. In an isolated power system with relatively low power system inertia, like Korea, the negative impact of intermittent renewable energy resources may have greater leverage [5]. As one of the various solutions to relieve the impact of renewable energy resources integration, global leaders—such as the U.S and Germany—are promoting the expansion of energy storage system (ESS) applications [6]. The ESS supply business is proceeding annually with government subsidies, and electricity charge discount programs are provided for using ESS to reduce consumers’ electricity bills

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