Title: Assessing Storage Value in Electricity Markets: A literature review
Publisher: Publications Office of the European Union
Publication Year: 2013
JRC N°: JRC83688
ISBN: 978-92-79-32363-8 (print)
978-92-79-32362-1 (pdf)
ISSN: 1018-5593 (print)
1831-9424 (pdf)
Other Identifiers: EUR 26056
OP LD-NA-26056-EN-C (print) LD-NA-26056-EN-N (pdf)
URI: http://publications.jrc.ec.europa.eu/repository/handle/JRC83688
DOI: 10.2790/89666
Type: EUR - Scientific and Technical Research Reports
Abstract: This report summarises the results of joint EDF R&D / JRC-IET research effort on energy storage. It provides a summary review of current literature on energy storage with particular attention to three broad topics: (i) the methodologies used for assessing storage value as defined by the fundamental assumptions, the problem definition and the solving strategies, (ii) the current market environment for electricity storage including drivers and barriers to deployment, the impact of technology developments, and (iii) the range of possible regulatory environments which would address the current challenges of power storage. Two broad categories of models can be distinguished: engineering models and system models. Engineering models aim at assessing the interest of an investment without modelling all the system, and mainly with price data. System models, on the other hand, aim at representing the effect of storage on the system, and calculate its interest in terms of cost diminutions. Many more classifications can be made regarding to the mathematical formulation and the solving techniques applied to the problem. There is no universal answer on whether storage is a profitable investment or adds value to a system. Recent engineering studies seem pessimistic regarding profitability of storage investments however the analysis most often restricted to revenues from power and reserve markets. System studies are able to identify more value pools (across the entire power value chain) and to assess value external to the storage investor. The results of forward looking system studies vary wildly: storage is able to add significant value but also to destroy value by necessitating additional not required in the absence of storage. All attempts at storage valuation require making assumptions on storage regulation. This may range from fees and technical rules, ownership questions or fundamental market regulation. Small technical issues can have a large impact on the viability of storage. As all current valuation frameworks for large scale storage originate in the deregulation of the power system, any change will have an impact on storage.
JRC Directorate:Energy, Transport and Climate

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