Assessing the value of storage in a future energy system with a high share of renewable electricity generation

Increasing the share of intermittent renewable electricity generation will require additional flexibility in the electricity system. While energy storage can provide such flexibility, studies about the economics of power storage often conclude that there is no business case for large-scale storage applications. In this paper, we present a new approach on how to assess the benefits of energy storage. Key improvements have been made in two areas: Firstly, the agent-based market simulation model PowerACE has been enhanced to make use of optimization methods (MILP) for the unit commitment of the agents, enabling us to quantify the economic benefit of flexibility at supply-agent level. Secondly, we have considerably extended the common unit commitment problem (Carrion and Arroyo, IEEE Trans Power Syst 21(3):1371–1378, 2006), so that we can now model the provision of positive and negative balancing power and the dispatch of storage units. We compare the flexibility offered by thermal power plants to that offered by storage units for the four major German electricity generating companies under two different scenarios. The results for 2030 indicate that it would be more profitable to build up to 4,800 MW storage capacity in the German market rather than investing in flexible combined cycle gas turbine plants or hard coal-fired units. The increasingly fluctuating residual load implies that inflexible power plants will be penalized. Using storage units, the power plants of an existing portfolio can be dispatched in a more efficient way, i.e. with less operation in part load and avoiding start-up or shutdown events.