Integration of Flexibility from Battery Storage in the Electricity Market

A growing share of intermittent renewable generation in the electric power system is increasing the need for flexibility. At the same time, decreasing battery prices are opening up new opportunities for energy storage. Battery energy storage systems can be used for multiple applications in the power system, such as storing an excess of renewable generated energy for later consumption, wholesale market arbitrage or providing ancillary services to the grid operators. Nevertheless, the return of investment in battery energy storage systems is often still perceived too low and uncertain. Selecting the right application, combining applications, and optimising the control and the size of a battery energy storage system are important steps to reduce uncertainty and increase the return on investment. This dissertation addresses how to make optimal use of flexibility from battery energy storage in electricity markets and the power system. The thesis provides an overview of the different applications battery storage can be used for and gives a quantitative estimation of the value battery storage can bring when delivering these applications. The results show that providing reserves for frequency control, i.e. supporting the stability of the grid frequency, is one of the applications that has the highest value for a battery storage system. Although arbitraging on short-term wholesale and imbalance markets have theoretically a higher potential value, achieving this value requires a perfect hindsight knowledge of the market prices, so that the practically achievable value lies a lot lower. Finally, there can also be considerable value in battery storage installed behind the meter, providing direct services to the electricity consumer, such as storing locally generated solar energy or reducing peak consumption. As battery storage systems have a limited energy content, they have to be operated in a different way than traditional power plants. When for instance used to provide symmetric frequency control, a battery energy storage system needs to control its state of charge to ensure the battery is never empty nor full, as this would mean the symmetric frequency control capacity is not available any more. This thesis presents a detailed, holistic framework to optimise such a state of charge controller and determine the optimal size of a battery storage system used for frequency reserves, taking degradation and regulatory requirements into account. As a case study, the optimisation framework is applied to the German frequency containment reserve market, providing some novel, relevant insights into the economics and sizing of a battery energy storage system in this market. Consecutively, this thesis looks at combining multiple applications simultaneously with battery storage installed behind the meter at residential and industrial consumers. The thesis presents optimised control strategies which allow the use of battery storage for the combination of frequency reserves with increasing self-consumption or with peak shaving. Stochastic optimisation is used together with robust optimisation techniques, giving a safe and tractable approximation to chance constraints, while dynamic programming is adopted to combine the longer-term objective of peak shaving with the daily decision making in the frequency reserve market. Case study results using real data show that there are indeed synergies when combining frequency reserves with increasing self-consumption or with peak shaving and the resulting controllers are able to significantly increase the value of a battery energy storage system compared to the use of the battery energy storage system for one application only. Finally, as battery storage is often connected to the distribution grid, this dissertation discusses the impact of distribution grid constraints on the aggregated flexibility from battery storage or from other flexible assets connected to the low-voltage distribution grid. The thesis focusses on a regulatory constraint which has been put in place in Belgium to prevent congestion of the distribution grid, limiting the frequency control capacity these assets can provide. A distributed optimisation algorithm is proposed to maximise the total frequency control capacity from low-voltage grid connected flexible assets while respecting these distribution grid constraints.status: publishe