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Energies 2017, 10(8), 1100; doi:10.3390/en10081100

Potential Arbitrage Revenue of Energy Storage Systems in PJM

1
Laboratory of Advanced Electric Grids - LGrid, Polytechnic School, University of São Paulo, São Paulo 05508-010, Brazil
2
John F. Kennedy School of Government, Harvard University, Cambridge, MA 02138, USA
3
John A. Paulson School of Engineering and Applied Sciences, Harvard University, Cambridge, MA 02138, USA
*
Author to whom correspondence should be addressed.
Academic Editor: Haolin Tang
Received: 15 May 2017 / Revised: 20 July 2017 / Accepted: 21 July 2017 / Published: 27 July 2017
(This article belongs to the Section Energy Storage and Application)

Abstract

The volatility of electricity prices is attracting interest in the opportunity of providing net revenue by energy arbitrage. We analyzed the potential revenue of a generic Energy Storage System (ESS) in 7395 different locations within the electricity markets of Pennsylvania-New Jersey-Maryland interconnection (PJM), the largest U.S. regional transmission organization, using hourly locational marginal prices over the seven-year period 2008–2014. Assuming a price-taking ESS with perfect foresight in the real-time market, we optimized the charge-discharge profile to determine the maximum potential revenue for a 1 MW system as a function of energy/power ratio, or rated discharge duration, from 1 to 14 h, including a limited analysis of sensitivity to round-trip efficiency. We determined minimum potential revenue with a similar analysis of the day-ahead market. We presented the distribution over the set of nodes and years of price, price volatility, and maximum potential arbitrage revenue. From these results, we determined the breakeven overnight installed cost of an ESS below which arbitrage would be profitable, its dependence on rated discharge duration, its distribution over grid nodes, and its variation over the years. We showed that dispatch into real-time markets based on day-ahead market settlement prices is a simple, feasible method that raises the lower bound on the achievable arbitrage revenue. View Full-Text
Keywords: battery; electricity market; energy arbitrage; energy storage; real-time market battery; electricity market; energy arbitrage; energy storage; real-time market
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This is an open access article distributed under the Creative Commons Attribution License which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited. (CC BY 4.0).

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MDPI and ACS Style

Salles, M.B.C.; Huang, J.; Aziz, M.J.; Hogan, W.W. Potential Arbitrage Revenue of Energy Storage Systems in PJM. Energies 2017, 10, 1100.

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