Game-Theoretic Analysis of Market-Based Operation Mechanism for Energy Storage System

Abstract

Energy storage system (ESS) is playing an important role in promoting the widespread penetration of renewable energy. However, the contributions of the flexibility provided by ESS are not adequately compensated in the current market mechanisms, which may compromise the enthusiasm for further investing ESS. Focusing on this issue, this article proposes a market-based operation mechanism for ESSs to reasonably evaluate the market value of ESS, as well as motivate them to promote wind power accommodation in base-load periods. Specifically, an ESS trading market is built for the energy storage aggregator (ESA) to purchase charging or discharging power from ESSs, and ESA can compete and bid strategically in the day-ahead (DA) electricity market. In addition, incentive compensation for the ESA in base-load periods is introduced to encourage the ESA to voluntarily and actively participate in wind power accommodation. To examine the effectiveness of the market mechanism, a multi-period joint equilibrium model for the strategic interactions among participants in both the DA electricity market and the ESS trading market is developed. In this model, wind power accommodation needs during base-load periods, as well as technical constraints such as the time coupled charging and discharging power limits of ESS are considered. At last, numerical cases are presented to validate the effectiveness and reasonableness of the proposed mechanism.