Storage Investment Research Articles

Short-term Optimization of the Operation of the CHP District Heating Plant with Heat Accumulator

In this work, the operating cost of the CHP production is reduced by creating optimization model to schedule the operation of the heat storage. The objective function of the model targets to minimize heat production costs and maximize profits of electricity production. To implement the optimization model in practice and automate the operation, the heat storage operation in every normal production situation of the CHP production with its real-life process constraints is modelled. To model the time-variant and non-linear system detailed enough, a MILP (Mixed Integer Linear Programming) model was selected and used to create a piecewise linear model of the system. A sliding time window method was used in the optimization to enable the most optimal heat storage operation in practice. The output of the optimization model is the operation plan of a heat storage for the next day, which provides the smallest operating cost for CHP production. The model can be also applied for heat storage investment planning.

A Primer about Storage in Bottom-Up Models of Future Energy Systems. Fundamentals of Storage Operation and Investment in Competitive Long-Term Equilibria

Growing shares of renewable energy sources (RES) in the electricity system increase the need for flexible balancing of supply-dependent feed-in of RES and time-varying demand. Besides flexible, conventional technologies and demand-responses, storage is an important option. Through the use of an analytical approach, this paper explores the implications of the short- and long-run electricity market equilibrium. While conventional and renewable technologies have fixed positions in the supply stack depending on their operational costs, storage may shift in the supply stack over time. Hence, shifts in the supply stack only occur if the storage is either full or empty; otherwise, the so-called shadow price of storage is constant. In a long-term partial electricity market equilibrium, this implies more complicated patterns of operational cash flows for storage technologies. These cash flow patterns will determine, in turn: how storage investments pay off, to what extent storage is part of an efficient energy system, and what power-to-energy ratio should storage have. The implications for future sustainable energy systems with multiple storage technologies are illustrated in a stylized application of Lithium-Ion batteries and pump hydro storage as two possible storage technologies.

Energy Storage Investment and Operation in Efficient Electric Power Systems

We consider welfare-optimal investment in and operation of electric power systems with constant returns to scale in multiple available generation and storage technologies under perfect foresight. We extend a number of classic results on generation, derive conditions for investment and operations of storage technologies described by seven cost/performance parameters, and develop insights on power systems with multiple storage technologies. Simulation of a deeply decarbonized “Texas-like” power system with two available storage technologies shows both the non-existence of simple “merit-order” rules for storage operation and the value of frequency domain analysis to describe efficient operation. Our analysis points to the critical role of the capital cost of energy storage capacity in influencing efficient storage operation.

Investment in carbon dioxide capture and storage combined with enhanced water recovery

Carbon dioxide capture and storage combined with enhanced deep saline water recovery (CCS-EWR) is a potential approach to mitigate climate change. However, its investment has been a dilemma due to high costs and various uncertainties. In this study, a trinomial tree modelling-based real options approach is constructed to assess the investment in CCS-EWR retrofitting for direct coal liquefaction in China from the investor perspective. In this approach, the uncertainties in CO2 prices, capital subsidies, water resource fees, the residual lifetime of direct coal liquefaction plants, electricity prices, CO2 and freshwater transport distance, and the amount of certified emission reductions (CERs) are considered. The results show that the critical CER price for CCS-EWR retrofits is 7.15 Chinese yuan per ton (CNY/ton) higher than that (141.95 CNY/ton) for CCS retrofits. However, the exemption from water resource fees for freshwater recovered from saline water and a subsidy of 26% of the capital cost are sufficient to eliminate the negative impact of enhanced deep saline water recovery (EWR) on the investment economy of CCS-EWR. In addition, when the residual lifetime is less than 14 years, CCS-EWR projects are still unable to achieve profitability, even with flexible management and decision making; therefore, investors should abandon CCS-EWR investments. On the whole, the investment feasibility for CCS-EWR technology is not optimistic despite access to preferential policies from the government. It is necessary to establish a carbon market with a high and stable CER price.

Qualitative and quantitative risk assessment of expanding photovoltaics in the Netherlands

Expanding photovoltaics (PV) is important for reaching Dutch renewable energy and climate targets. In this paper, we assess risks of scaling up PV in the Dutch electricity sector and economy. With a computable general equilibrium model setup to analyse scenarios until 2050, we show that increasing PV shares initially lead to higher costs of electricity supply and thus retail prices. Until 2025, large storage investments will be required, leading to lower consumption possibilities presenting a critical barrier to initiate PV expansion. However, from 2025 onwards PV installation costs are expected to become competitive to wind power, leading to lower costs of electricity supply and electricity retail prices, with positive macroeconomic effects. Overall, we find positive long-term effects of PV expansion on GDP, welfare and employment from 2025 until mid-century. With stakeholders we then investigate system-level obstacles for PV expansion in the Netherlands. A key observation is that inconsistent policy mixes are an obstacle to successful PV implementation.

From Meow to ROAR: Expanding Open Access Repository Services at the University of Houston Libraries

INTRODUCTION The rapidly changing scholarly communication ecosystem is placing a growing premium on research data and scholarship that is openly available. It also places a growing pressure on universities and research organizations to expand their publishing infrastructures and related services. DESCRIPTION OF PROGRAM To embrace the change and meet local demands, University of Houston (UH) Libraries formed a cross-departmental open access implementation team in 2017 to expand our open access repository services to accommodate a broad range of research products beyond electronic theses and dissertations (ETDs). The result of this effort was the Cougar Research Open Access Repositories (Cougar ROAR), a rebranded and expanded portal to the UH Institutional Repository, and the UH Dataverse, which disseminates the full range of scholarly outputs generated at the University of Houston. This article describes the team’s phased activities, including internal preparation, a campus pilot, rebranding, and a robust outreach program. It also details the team’s specific tasks, such as building the Cougar ROAR portal, developing ROAR policies and guidelines, enhancing institutional repository functionality, conducting campus promotional activities, and piloting and scaling a campus-wide open access program. NEXT STEPS Based on the pilot project findings and the resulting recommendations, the team outlined key next steps for sustainability of the UH Libraries’ open access services: continuation of the campus CV service, establishment of campus-wide OA policy, further promotion of Cougar ROAR and assessment of OA programs and services, and investment in long-term storage and preservation of scholarly output in Cougar ROAR.

Multi-period planning of multi-energy microgrid with multi-type uncertainties using chance constrained information gap decision method

In this paper, we study the multi-period planning problem of multi-energy microgrids considering the long-term uncertainty (i.e., the declining trend of battery storage investment cost) and the short-term uncertainty (i.e., renewable energy generation and electrical/heat load). We first present the joint deterministic multi-period planning approach for multi-energy microgrid coupling electricity and heat carriers. Then, an information gap decision (IGD)-based multi-energy microgrid multi-period planning model dealing with the long-term uncertainty is proposed, and the proposed model is further converted into a mixed integer linear planning (MILP) IGD-based planning model. Next, to coordinate the long-term uncertainty and the short-term uncertainty in multi-energy microgrid planning problems, we develop a chance constrained (CC) IGD-based multi-period planning model and then convert such model into a MILP CC-IGD equivalence. Finally, the strengthened bilinear Benders decomposition (SBBD) algorithm is adopted to efficiently solve our proposed MILP CC-IGD model for large-scale multi-energy microgrid planning problems. Our numerical results demonstrate the advantage of the joint planning of electricity and heat supply systems in multi-energy microgrids. Case studies verify the effectiveness of considering multi-type uncertainties in multi-energy microgrid planning, especially the declining trend uncertainty of battery storage investment cost. Experimental results also show that the SBBD algorithm is more efficient on computing our proposed MILP CC-IGD model compared to commercial solvers, such as CPLEX.

Storage or No Storage: Duopoly Competition Between Renewable Energy Suppliers in a Local Energy Market

This paper studies the duopoly competition between renewable energy suppliers with or without energy storage in a local energy market. The storage investment brings the benefits of stabilizing renewable energy suppliers' outputs, but it also leads to substantial investment costs as well as some surprising changes in the market outcome. To study the equilibrium decisions of storage investment in the renewable energy suppliers' competition, we model the interactions between suppliers and consumers using a three-stage game-theoretic model. In Stage I, at the beginning of the investment horizon, suppliers decide whether to invest in storage. Once such decisions have been made, in the day-ahead market of each day, suppliers decide on their bidding prices and quantities in Stage II, based on which consumers decide the electricity quantity purchased from each supplier in Stage III. In the real-time market, a supplier is penalized if his actual generation falls short of his commitment. We characterize a price-quantity competition equilibrium of Stage II, and we further characterize a storage-investment equilibrium in Stage I incorporating electricity-selling revenue and storage cost. Counter-intuitively, we show that the uncertainty of renewable energy without storage investment can lead to higher supplier profits compared with the stable generations with storage investment due to the reduced market competition under random energy generation. Simulations further illustrate results due to the market competition. For example, a higher penalty for not meeting the commitment, a higher storage cost, or a lower consumer demand can sometimes increase a supplier's profit. We also show that although storage investment can increase a supplier 's profit, the first-mover supplier who invests in storage may benefit less than the free-rider competitor who chooses not to invest.

E&P Notes (November 2019)

E&P Notes Majors Step Up Low-Carbon Initiatives The Oil and Gas Carbon Initiative (OGCI), the CEO-led enterprise formed to drive the industry response to climate change, has launched a new effort to unlock large-scale investment in carbon capture, use, and storage (CCUS) as a crucial tool to help achieve net zero emissions. The CCUS initiative is designed to help decarbonize multiple industrial hubs around the world. The goal of the initiative, according to OGCI, is to double the amount of CO2 that is currently being stored globally before 2030 while building a pipeline of potential future hubs to bring the fledgling CCUS industry to scale. To achieve this goal, OGCI says it will start by building on the work of many others to jointly put five emerging hubs into operation in the US, the UK, Norway, The Netherlands, and China. In parallel, OGCI announced it has launched a joint CCUS Acceleration Framework with the 11 countries supporting the Clean Energy Ministerial CCUS Initiative, a high-level global forum working to create a global, commercial CCUS industry at the scale needed to meet the Paris Climate Agreement goals. BP Appraisal Well Proves “World-scale Gas Resource” Offshore Senegal The BP-operated Yakaar-2 appraisal well off Senegal encountered 30 m of net gas pay in a similar high-quality Cenomanian reservoir as the Yakaar-1 discovery well drilled in 2017, partner Kosmos Energy said 23 September. Yakaar-2 was drilled 9 km from Yakaar-1 and proved up the southern extension of the field. Kosmos said the results underpin its view that the Yakaar-Teranga resource base is “world-scale” and could support an LNG project to supply domestic and export gas markets. The previous Yakaar and Teranga discoveries on the Cayar Offshore Profond block confirmed that a prolific inboard gas fairway extends 200 km from Mauritania through the Greater Tortue area on the maritime boundary of Senegal and Mauritania, according to Kosmos’ website. The Teranga-1 discovery well was drilled in 2016. Development of Yakaar-Teranga is expected in a phased approach with Phase 1 providing domestic gas and data to optimize the development of future phases. Chevron, Schlumberger, Microsoft Team To Improve Digital, Petrotechnical Work Flows Chevron, Schlumberger, and Microsoft will combine their capabilities to create better digital, cloud-enabled work flows. The companies will build for Chevron applications in Schlumberger’s DELFI cognitive exploration and production (E&P) environment that will be native to Microsoft’s Azure cloud computing platform. DELFI is a scalable and open cloud-based environment providing E&P software technology across the exploration, development, production, and midstream segments. The combination of digital technologies will enable Chevron—and, eventually, other companies—to process, visualize, interpret, and glean insights from multiple data sources, the companies said. Summer of Funding: These Oil and Gas Startups Raised More Than $70 Million The oil and gas industry’s appetite for emerging innovations grew by at least $70 million over the past few months as investment arms of several large producers and upstream venture firms completed funding rounds for startups. The influx of cash into young firms is considered a major component of the upstream industry’s drive toward digital transformation. The companies attracting investor attention tilt toward the North American shale sector, which has been turning to new technologies to unravel the complexities of tight reservoir development. Others apply more broadly to unconventional and conventional field development. Study of DUCs Concludes Better Later than Never Delaying a completion by as many as 4 years has “little effect” on the initial production level, according to a new study by US Energy Information Administration (EIA). The study tested the assumption that long-delayed completions mean a well is not worth the cost. “Some people say you cannot fracture a well drilled more than a year ago,” but the data says otherwise, said Jozef Lieskovsky, a senior analyst for the EIA who coauthored the report. The study looked at Bakken wells dating back to 2014, when the oil price crash caused a surge in drilled but uncompleted wells (DUCs) as companies slashed spending. What the EIA found was that the average initial production for the oldest wells (3–4 years old) peaked at a slightly higher level that the youngest ones (1–2 years old).

Comments: Environmental Headwinds

Editor's column Sustainability and environmental issues played a key part in the content at two of SPE’s recent major conferences. Offshore Europe was held in Aberdeen in September and the Annual Technical Conference and Exhibition (ATCE) took place for the first time in Canada in late September-early•October. Days before the ATCE conference began, activists held rallies around the world, including in Canada, demanding action on climate change, and the issue has risen to the forefront of political campaigns in Europe and the US. Three presidential candidates in the US have promised to “ban” hydraulic fracturing for environmental reasons if elected, although not offering specifics. At the United Nation’s climate change summit in September, more than 100 international banks pledged to decrease investment in the oil and gas sector because of the issue. The bankers promised to support full implementation of the Paris climate agreement and increase investments in renewables in lieu of hydrocarbons. The oil and gas industry is paying attention, as government and financial scrutiny of it increases and as public momentum for environmental regulation grows. But the scrutiny comes at a time when global energy consumption also is increasing, particularly in developing counties. Even with increased support for renewable forms of energy, oil and gas will play a major role in meeting world demand for years to come. At the same time the climate summit was taking place, the Oil and Gas Climate Initiative (OGCI)—a CEO-led group representing international and national oil companies—met in New York and announced further plans to accelerate the reduction of greenhouse gas emissions and support the goals of the Paris agreement. The group outlined a proposal to encourage investment in carbon capture and storage, and reported progress toward its goal of reducing industry methane emissions. OGCI said its member companies met its “methane intensity target” by cutting intensity 9% in 2018. It is now working to reduce carbon intensity in upstream operations by 2025. Members of the OGCI include ExxonMobil, Chevron, Shell, BP, Total, Equinor, Occidental, Eni, Repsol, Saudi Aramco, Petrobras, and CNPC. Both individual companies and other organizations are also taking steps to reduce the industry’s environmental footprint. During the Offshore Europe conference, The Oil & Gas Technology Centre announced it will create with industry a Net Zero Solution Centre to accelerate the development and deployment of technologies to de carbonize offshore operations and develop the UK continental shelf as the first global net zero oil and gas basin. The center is backed by several companies, including BP, Shell, Total, and Equinor. Much of the industry’s response hangs on the viability of carbon capture, utilization, and storage. The International Energy Agency describes it as one of the only technology solutions that can significantly reduce emissions across key industries. An article beginning on page 24 of this issue outlines the industry’s progress in this initiative and the challenges to be met.

The value of hydrogen and carbon capture, storage and utilisation in decarbonising energy: Insights from integrated value chain optimisation

There is increasing interest in carbon capture, utilisation and storage (CCUS) and hydrogen-based technologies for decarbonising energy systems and providing flexibility. However, the overall value of these technologies is vigorously debated. Value chain optimisation can determine how carbon dioxide and hydrogen technologies will fit into existing value chains in the energy and chemicals sectors and how effectively they can assist in meeting climate change targets. This is the first study to model and optimise the integrated value chains for carbon dioxide and hydrogen, providing a whole-system assessment of the role of CCUS and hydrogen technologies within the energy system. The results show that there are opportunities for CCUS to decarbonise existing power generation capacity but long-term decarbonisation and flexibility can be achieved at lower cost through renewables and hydrogen storage. Methanol produced from carbon capture and utilisation (CCU) becomes profitable at a price range of £72–102/MWh, compared to a current market price of about £52/MWh. However, this remains well below existing prices for transport fuels, so there is an opportunity to displace existing fuel demands with CCU products. Nonetheless, the scope for decarbonisation from these CCU pathways is small. For investment in carbon capture and storage to become attractive, additional drivers such as decarbonisation of industry and negative emissions policies are required. The model and the insights presented in this paper will be valuable to policymakers and investors for assessing the potential value of the technologies considered and the policies required to incentivise their uptake.

Relationships between key functional traits of the waterlily Nuphar lutea and wetland nutrient content.

Little attention has been paid to how aquatic habitat characteristics affect the traits of plant species. Nuphar lutea (L.) Sm. is a keystone species distributed across temperate regions of Europe, northwest Africa and western Asia. Its apparently low phenotypic variability compared to other aquatic plants led us to test whether the species exhibited significant phenotypic variability and whether trait values correlated to environmental parameters. The hypotheses were that (1) the environmental variation within our set of wetlands (both water and sediment characteristics) led to significant variation among four sets of traits related respectively to growth, reproduction, defence and storage and (2) that nutrient limitation (nitrogen and especially phosphorus) should affect plant traits towards a higher investment in storage and defence and a lower investment in growth and reproduction, thereby negatively affecting the success of N. lutea. To test these hypotheses, 11 populations of N. lutea were sampled in wetlands differing in physicochemical characteristics and spread along three rivers. A total of 15 traits, grouped into four sets (growth, reproduction, storage and defence), were measured during the growing season. Most N. lutea traits were related to the environmental characteristics of wetlands. The growth and reproduction traits were mostly positively related to habitat resource conditions, whereas the defence traits were positively correlated with both ammonium concentration and temperature, outlining possible anoxic stress (habitat adversity). Nitrogen or phosphorus limitation led to the variation of only a few traits: the rhizome starch content was higher in phosphorus-limited wetlands, while the rhizome length and volume, and the number of flowers were higher in nitrogen-limited wetlands.

Smart grids and renewable electricity generation by households

This paper analyzes investments in solar panels and energy storage at a household (HH) level and studies the consequences of demand-side management for a HH by accounting for three levels of equipment in smart grids. The first level refers to the possibility of feeding electricity to the grid, which can be achieved relatively simply by net metering. The second level concerns the installation of smart meters. The third level relates to energy storage. Additionally, we look at the welfare impact of a policy imposing the installation of smart meters and the implications of curtailment measures to avoid congestion. Our analysis conveys core messages for the policymakers by showing that smart meter deployment can be welfare worsening and lead to higher grid electricity purchase depending on the tariffs. In turn, greenhouse gas emissions can be higher if fossil fuels hold a significant share in grid electricity production. This calls for regulation of tariff rates.

Profitable Emissions-Reducing Energy Storage

While energy arbitrage from energy storage can lower power system operating costs, it can also increase greenhouse gas emissions. If power system operations are conducted with the constraint that energy storage operation must not increase emissions, how does this constraint affect energy storage investment decisions? Two bi-level energy storage investment problems are considered, representing `philanthropic' (profitability-constrained) and profitmaximizing storage investors (PhSI, PMSI). A MILP heuristic is developed to obtain good candidate solutions to these inherently MINLP bi-level problems. A case study is conducted on a 30% renewable system, with sensitivity analyses on the price of storage and the price of carbon emissions. Regardless of the emissions-neutrality constraint, a PhSI installs significantly more energy storage than a PMSI, increasing system flexibility. The effect of the emissions-neutrality constraint in the absence of a carbon price is to reduce the quantity of storage purchased and reduce annual system emissions (~3%), with only minor increases in overall cost (~0.1%). In cases with a carbon price, storage does not tend to increase emissions and the emissions constraint does not tend to decrease storage investment. The emissions-neutrality constraint is seen to deliver similar emissions reductions even in a system with much higher renewable penetration (46%).

Barriers, Driving Forces and Non-Energy Benefits for Battery Storage in Photovoltaic (PV) Systems in Modern Agriculture

Battery storage has been highlighted as one way to increase the share of renewables in energy systems. The use of local battery storage is also beneficial when reducing power variations in the grid, thereby contributing to more robust and cost-effective energy systems. The purpose of this paper is to investigate barriers, drivers and non-energy benefits (NEB) for investments in battery storage in photovoltaic systems (PV) in the context of farmers with PV systems in Sweden. The study is based on a questionnaire about barriers, driving forces and NEB for investment in battery storage connected to PV. The questionnaire was sent to farmers in Sweden who already have photovoltaics installed and about 100 persons answered, a response rate of 59%. The major barriers found are related to the technical and economic risks of investing in battery storage. One of the main conclusions is that the highest-ranked driver, i.e., to use a larger part of the produced electricity oneself, turns out to be the highest priority for the grid-owner seeking to reduce the need for extensive investments in the grid. The primary NEBs found were the possibility of becoming independent from grid electricity.

An agent-based model to simulate technology adoption quantifying behavioural uncertainty of consumers

A good estimation of consumers’ expected response to specific policy measures is of paramount importance in the design of effective schemes for the adoption of new technologies. The decision-making process of consumers is influenced by a multitude of factors. In this context, agent-based modeling techniques provide an appropriate framework to model such private adoption decisions. However, the models currently in use often fail to capture uncertainties related to agency and their ability to replicate reality. In order to address this drawback, we developed an agent-based technology adoption model that is supported by a complete framework for parameter estimation and uncertainty quantification based on historical data and observations. The novelty of our model lies in obtaining realistic uncertainty bounds and splitting the total model output uncertainty in its major contributing uncertainty sources. In this article, we demonstrated its applicability by exploring the evolution of the market share of small-scale PV systems in Greece, under two support schemes of interest. Our results indicated that, over 2018–2025, the net-metering scheme, currently operational, seems more effective than a proposed self-consumption scheme that subsidizes residential storage by 25%; however, the former scheme’s effectiveness is mainly related to the retail price of electricity. They also highlighted that storage investment costs need to follow a steep learning curve of at least a 10% annual reduction until 2025, for self-consumption to become attractive to consumers in Greece. Nevertheless, simulations showed that none of these two schemes can be as efficient as the previous feed-in-tariffs scheme.

Comparison of subsidy schemes for carbon capture utilization and storage (CCUS) investment based on real option approach: Evidence from China

This study adopts the real option approach to compare the impacts of different subsidy schemes, including initial investment subsidy, electricity tariff subsidy, and CO2 utilization subsidy, on the investment benefit of carbon capture utilization and storage (CCUS) project in China under high, medium, and low coal price levels, respectively. The results show that: (1) Under the current oil price level (70 USD/bbl), CO2 utilization subsidy referring to the 45Q Tax Credit released by the US government is high enough to trigger the investment behavior immediately. However, the full initial investment subsidy needs to be replenished with other ways and the electricity tariff subsidy needs to increase by 2.6 times compared with the current subsidy for renewable energy (0.019 CNY/kWh). (2) The critical oil prices under full investment subsidy and electricity tariff subsidy need to increase by at least 2.7% and 14.1%, respectively. (3) Both electricity tariff subsidy and CO2 utilization subsidy are feasible, while the former need to exceed the current subsidy for renewable energy and the latter is more favorable in promoting the development of full-chain CCUS project and the increase of oil production. (4) The optimal investment timing can be brought forward to 2023 if the technological learning rate reaches 30% under the low coal price level; the investors should abandon the project until the technological learning rates reach 5% and 10% under the medium and high coal price levels, respectively. Overall, our results enable to provide useful information for the policy-makers to formulate subsidy policies.

Financial Incentives for Joint Storage Planning and Operation in Energy and Regulation Markets

We analyze two market mechanisms for energy storage investment and operation: first, socially optimal storage investment with centralized operation, second, profit-maximizing storage investment with deregulated operation. For mechanism i), under which a social planner centrally optimizes storage investment and operation (in both energy and regulation markets), we prove that the revenue collected from storage operation exactly covers the investment and operation cost at a social optimum. For mechanism ii), where a profit maximizing firm strategically determines the siting and sizing of batteries, we evaluate two financial incentive mechanisms that encourage energy storage investment by offering a tax credit based on the installed storage capacity and the amount of energy delivered from the storage, respectively. When the storage capital cost is mid-range, these two policies are shown to achieve higher installed storage capacity and lower social cost compared to the case without such incentives. When the capital cost is high, however, these two policies can lead to over-investment and higher social cost.

Quantifying electricity storage arbitrage opportunities in short-term electricity markets in the CWE region

Abstract In electricity storage valuation studies, the lack of the (efficient) aggregation of applications in a single operation strategy is usually identified as a major barrier. Determining the true value of storage requires the aggregation of applications while accounting for the interdependence between revenue streams. Individual applications cannot simply be added together, but need to be co-optimized since they can interfere with each other. This article's contributions are threefold. First, we provide model formulations to aggregate multiple arbitrage opportunities, and to quantify the accompanying potential arbitrage value. Whereas the storage arbitrage literature focuses on the capturing of price differences over time for the day-ahead market, we consider all three short-term markets, i.e., the day-ahead, intra-day, and real-time markets, and we consider the opportunity to capture three types of price differences: (1) over time in each individual market, (2) over the three markets for the same time step, and (3) over time over the three markets. Second, an important assumption in arbitrage models is related to whether storage operators recognize that their actions may affect those prices. This price-effect of storage actions has been considered before for the day-ahead market, but not for the intra-day and real-time markets. We study the price-effect with high detail for all three short-term markets, based on real-world price and volume data. Third, we apply the developed models to the four market zones of the Central Western European region, i.e., the Belgian, French, German, and Dutch market zones, while elaborating on the price-effect for the Belgian zone. As such, this article provides insight in the extent to which the three short-term markets, and their combination, in these market zones are potentially interesting for storage arbitrage. This assists improved decision-making of market participants in storage investment and operation, and informs policy-makers about the impact of market design on the potential storage value.

Virtual Energy Storage Sharing and Capacity Allocation

Energy storage can play an important role in energy management of end users. To promote an efficient utilization of energy storage, we develop a novel business model to enable virtual storage sharing among a group of users. Specifically, a storage aggregator invests and operates the central physical storage unit, by virtualizing it into separable virtual capacities and selling to users. Each user purchases the virtual capacity, and utilize it to reduce the energy cost. We formulate the interaction between the aggregator and users as a two-stage optimization problem. In Stage 1, over the investment horizon, the aggregator determines the investment and pricing decisions. In Stage 2, in each operational horizon, each user decides the virtual capacity to purchase together with the operation of the virtual storage. We characterize a stepwise form of the optimal solution of Stage-2 Problem and a piecewise linear structure of the optimal profit of Stage-1 Problem, both with respect to the virtual capacity price. Based on the solution structure, we design an algorithm to attain the optimal solution of the two-stage problem. In our simulation results, the proposed storage virtualization model can reduce the physical energy storage investment of the aggregator by 54.3% and reduce the users' total costs by 34.7%, compared to the case where users acquire their own physical storage.