Intermittency and the social role of storage

Abstract

Our paper examines the social benefit of energy storage in terms of smoothing the intermittent output of wind in Britain in the context of a significant wind generation presence. The resultant price smoothing creates benefits as follows: grid scale storage has a price suppressing effect, decreasing the probability of remaining in the high price and high volatility regime during peak hours, and it increases the probability of remaining in the normal regime during off-peak hours. Under the assumption that the effects on market prices are passed through to final consumers, and ignoring the facility construction costs, our results strongly suggest that there are clear potential social advantages resulting from deploying grid-level storage in the presence of intermittent wind generation.