TY - JOUR
T1 - Why market rules matter
T2 - Optimizing pumped hydroelectric storage when compensation rules differ
AU - Paine, Nathan
AU - Homans, Frances R.
AU - Pollak, Melisa
AU - Bielicki, Jeffrey M.
AU - Wilson, Elizabeth J.
N1 - Publisher Copyright:
© 2014.
PY - 2014/11/1
Y1 - 2014/11/1
N2 - Policies, markets, and technologies interact to create the modern electrical system. Integrating large amounts of electricity generated by variable renewable resources, such as from wind and sunlight, into electricity systems may require energy storage technologies to synchronize electricity production with electricity demand. Electricity markets compensate the performance of these energy storage technologies for the services they provide, and these markets are often operated by regional independent system operators (ISOs) that specify the market rules for this compensation. To examine how different ISO rules can affect the operation and profitability an energy storage technology, we develop a dynamic programming model of pumped hydroelectric storage (PHES) facility operation under the market rules from the Midcontinent ISO and ISO-New England. We present how differences in rules between these ISOs produced different operational strategies and profits, and how important they are for PHES profitability.
AB - Policies, markets, and technologies interact to create the modern electrical system. Integrating large amounts of electricity generated by variable renewable resources, such as from wind and sunlight, into electricity systems may require energy storage technologies to synchronize electricity production with electricity demand. Electricity markets compensate the performance of these energy storage technologies for the services they provide, and these markets are often operated by regional independent system operators (ISOs) that specify the market rules for this compensation. To examine how different ISO rules can affect the operation and profitability an energy storage technology, we develop a dynamic programming model of pumped hydroelectric storage (PHES) facility operation under the market rules from the Midcontinent ISO and ISO-New England. We present how differences in rules between these ISOs produced different operational strategies and profits, and how important they are for PHES profitability.
KW - Electricity markets
KW - Energy market rules
KW - Energy storage
KW - Independent system operator
KW - Pumped hydro
KW - Reliability services
UR - http://www.scopus.com/inward/record.url?scp=84907772629&partnerID=8YFLogxK
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U2 - 10.1016/j.eneco.2014.08.017
DO - 10.1016/j.eneco.2014.08.017
M3 - Article
AN - SCOPUS:84907772629
SN - 0140-9883
VL - 46
SP - 10
EP - 19
JO - Energy Economics
JF - Energy Economics
ER -
