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Showing posts from June, 2023

The Impact of Storage Configuration on Electricity Arbitrage

In the previous post, we tried to estimate the opportunity for storage based arbitrage in a variety of European day-ahead electricity markets. For that we have used a "fast & efficient" storage model inspired by lithium-ion based storage systems  with a round-trip cycle efficiency of over 90% and the ability to charge or discharge the entire storage capacity during each interval - i.e. a 1MWh storage with a 1 MW input/output power resulting in a storage duration of 1 hour. Other storage technologies allow a more independent scaling of the maximum charge/discharge power from the maximum amount of energy the storage can hold, typically at a much lower marginal cost per additional unit of capacity. One such example is pumped hydro storage, which is by far the most common form of large-scale electricity storage today. The input output power rating is determined by the configuration of the turbines, generators and pumps which contribute significantly to the cost of the instal

Buy Low, Sell High - Optimal Electricity Storage Cost Arbitrage

As more and more solar and wind generation capacity is integrated into a power grid without sufficient storage , the intra-day electricity market prices tend to fluctuate between near-zero when there is an over-supply of renewable energy and quite expensive when fossil fuel power plants need to be brought online to cover the demand. The fewer hours these plants run and the more expensive the fossil fuel becomes the more the range of this short term fluctuations will increase, unless they can potentially be substituted by a cheaper solution.  Using electricity market data from the ENTSO-E transparency platform , we can determine what would be the maximum profit the operator of a hypothetical storage unit could make by deploying an optimal strategy of buying low and selling high. The storage is assumed to have one unit of power, i.e. in this case it could either charge or discharge one MWh of energy in a given hour. The storage system can have a capacity of n hours and a round-trip effi