Improving Energy Storage Market Design
This press release was originally published by Columbia Engineering.
energy storage Play a vital role in our transition to cleaner and more sustainable energy. It allows us to store excess energy from renewable sources like wind and solar when available and use it when demand is high or supply is limited. This helps stabilize the grid, reduces dependence on fossil fuels, and mitigates the impact of intermittent energy sources.
Balancing consumer demand and power system capacity
In many parts of the U.S., such as New York, California, and Texas, private companies own and operate energy storage systems. These businesses participate in the electricity market, buying and selling electricity to maximize profits. For consumers, however, it is important to ensure that a company’s profit-driven motives are also aligned with the broader goal of increasing sustainability and improving lives around the world. That means finding a balance between reducing carbon emissions and keeping electricity bills affordable for consumers. Aligning the needs of electricity users with the capabilities of the electricity system while promoting a greener future is critical.
Electricity markets are intricately linked to the physical power system, making them distinct from other markets. In order to ensure the smooth and efficient operation of the market, a professional model is adopted to clean up participating resources. These models take into account the physical properties of the resources, such as their generating capacity and availability. The goal of electricity market design is to create and update these models in a way that maximizes the benefit to society as a whole.
A new model of market participation and interaction
a new study led by Columbia Engineeringpublished in joule, examining how different ways of participating in these markets affect the overall benefits of energy storage for society. The researchers used an agent-based computer framework—a model that simulates the behavior of individuals within complex systems—to simulate scenarios with renewable and storage capacities and market choices.
“Our main innovation is to simulate market engagement interactions between storage and markets,” said the study’s lead author Bolun Xuassistant professor Earth and Environmental Engineering“We found that not only do we need more renewable energy and better storage technologies, but market design that best integrates energy storage to reduce costs and emissions in future electricity systems is also critical. To do this, we need New computational methods and, in the future, AI-assisted analysis will be required.”
“Our study highlights how market design can significantly affect the role of energy storage in the electricity economy and decarbonization process, from the early decarbonization phase to the deep decarbonization phase.” – Bolun Xu, Assistant Professor of Earth and Environmental Engineering
The delicate balance between economics and emissions reductions
This figure shows that different market participation options from energy storage form a frontier trade-off between carbon emissions and consumer payments. The lower left direction represents cheaper and cleaner energy. With sufficient wind and solar renewable generation, higher storage capacity moves the boundary further down and to the left. Nonetheless, market participation options form trade-off boundaries at each capacity level. Credit: Bolun Xu/Columbia Engineering
The study compares different ways energy storage can participate in the market and reveals the trade-offs between making energy more affordable for consumers and reducing carbon emissions. Participating in the day-ahead market, where electricity is traded the day before it is needed, can be more effective at reducing carbon emissions, the researchers found. On the other hand, participation in the real-time market for real-time trading of electricity can reduce costs more effectively.
“Our study highlights how market design can significantly affect the role of energy storage in the electricity economy and decarbonization process, from the early decarbonization phase to the deep decarbonization phase,” Xu said. “Our proposed open-source framework provides researchers and policymakers with an invaluable tool for evaluating emerging technologies and policy incentives.”
next steps
Xu’s team is currently working with the national laboratory and California ISO, the nonprofit organization that manages the state’s grid and electricity market. They are working with projects created by the U.S. Department of Energy and the National Science Foundation to explore new market designs and integrate AI to analyze and assist energy storage operations.
“It is clear,” added Xu, “that the deployment of renewable energy and storage resources must be accompanied by proper electricity market design and policy incentives to balance the economy and reduce emissions. California has the highest storage capacity in the world, and we are pleased to be able to Deploy our solution there.”
