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VALUE OF BATTERY STORAGE SYSTEM IN THE FEREQUENCY REGULATION MARKETS OF PJM AND CAISO
Title
VALUE OF BATTERY STORAGE SYSTEM IN THE FEREQUENCY REGULATION MARKETS OF PJM AND CAISO
Creator
Khorsand, Shervin
Date
2017, 2017-05
Description
With an increasingly urgent need to decrease our utilization of fossil fuels, renewable power sources such as wind and solar are being...
Show moreWith an increasingly urgent need to decrease our utilization of fossil fuels, renewable power sources such as wind and solar are being incorporated in the electricity grid. However, these sources lack the conventional reliability that fossil fuels, such as natural gas, and oil have previously provided. The solution lies in energy storage, and exactly why battery storage systems are the means for renewable energy sources to become truly transformative and revolutionize the energy market. In the first part of this paper, a comprehensive summary of the different types of energy storage technologies have been provided along with their features, which make each technology suitable for different applications. Next, a detailed chapter focused on battery storage systems and their properties is provided along with the ancillary services they offer as sustenance and support sources integrated in the electric grid. These service are integral to the continuous transmission of power to consumers, and necessary for the supply to meet end-user demands. Among these service include frequency regulation as well as spinning reserve services, the latter being important under emergency condition following a power disruption. Regulation services however, are constantly required for grid stability and reliability, which is why this service was selected for further market analysis. For this market analysis, the California Independent Systems Operator (CAISO), and PJM Interconnection (PJM) were selected as both have extensive regulation markets and two of the major power suppliers nationwide. The main question in conducting this analysis was to determine which market would be more attractive and profitable for a potential regulation provider to invest using a Lithium ion battery. The Regulation Market Clearing Price (RMCP) for each market was extracted from the operators’ annual reports over the last six years and used as measure of investor revenue. The Levelized Cost of Energy Storage was computed for a Lithium ion battery with certain characteristics, and the investor revenue was calculated as a percent of the LCOE. Our analysis showed that although CAISO’s regulation market is showing growth in the recent years, especially in 2016 during the period of increased regulation requirement, PJM has had consistently higher RMCP values, which means the investor revenue would be higher in PJM. Our calculations show that investing a Lithium ion battery with a power rating of 10MW, and energy capacity of 5 MWh, operating at 89% efficiency for 4.8 cycles per day for 350 days in PJM is going to be economically a much smarter choice.
M.S. In Electrical Engineering, May 2017
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