Study on energy storage system investment decision based on real option theory

Abstract

Issues of load peak-valley difference, security and stability of power system, as well as large-scale development and utilization of renewable energy represented of wind and solar, promote the application process of electric energy storage technologies in power system. Energy storage technology, which can isolate the production and use of electrical energy, plays important roles in restraining wind power output fluctuations, improving power quality, peak load shifting, frequency regulation of power grid, etc. Under current technical level, the development of energy storage industry needs the support of national policy, and there exists great venture in its investment. Therefore it is necessary to assess the economical problem of energy storage project investment. This paper mainly researches on the economic evaluation of the application of electric energy storage system (EES) on improving wind power acceptance. As configuration of energy storage system in wind farm accompanied by irreversibility, uncertainty, and sustainable development of project investment, according to the theory of real options, binary tree option pricing model, which can be used to analyze investment decision-making issues under uncertain environment, is introduced to analyze issues of investment economy on li-ion batteries, vanadium redox flow battery, sodium sulfur battery energy storage system. (4 pages)