Impacts of ramping inflexibility of conventional generators on strategic operation of energy storage facilities

This paper proposes an approach to assist a pricemaker merchant energy storage facility in making its optimal operation decisions. The facility operates in a pool-based electricity market, where the ramping capability of other resources is limited. Also, wind power resources exist in the system. The merchant facility seeks to maximize its profit through strategic inter-temporal arbitrage decisions, when taking advantage of those ramp limitations.

The market operator, on the other hand, aims at maximizing the social welfare under wind power generation uncertainty. Thus, a stochastic bi-level optimization model is proposed, taking into account the interactions between the storage facility and the market operator, and the existing market opportunities for the storage facility.

The proposed bilevel model is then transformed into a Mathematical Program with Equilibrium Constraints (MPEC) that can be recast as a Mixed-integer Linear Programming (MILP) problem. Different case studies are presented and discussed using a six-bus illustrative example and the IEEE one-area reliability test system to evaluate the performance of the proposed approach.