Profitable Emissions-Reducing Energy Storage

TL;DR

This paper investigates how imposing emissions-neutrality constraints on energy storage operations influences investment decisions and system emissions, finding that such constraints can reduce storage and emissions with minimal cost increase.

Contribution

It introduces a bi-level MILP heuristic for storage investment problems considering emissions constraints and analyzes their impact in renewable-rich power systems.

Findings

Emissions-neutrality constraints lead to increased storage investment and flexibility.

Such constraints can reduce system emissions by approximately 3%.

Storage investment is less affected by emissions constraints when a carbon price exists.

Abstract

While energy arbitrage from energy storage can lower power system operating costs, it can also increase greenhouse gas emissions. If power system operations are conducted with the constraint that energy storage operation must not increase emissions, how does this constraint affect energy storage investment decisions? Two bi-level energy storage investment problems are considered, representing 'philanthropic' (profitability-constrained) and profit-maximizing storage investors (PhSI, PMSI). A MILP heuristic is developed to obtain good candidate solutions to these inherently MINLP bi-level problems. A case study is conducted on a 30% renewable system, with sensitivity analyses on the price of storage and the price of carbon emissions. Regardless of the emissions-neutrality constraint, a PhSI installs significantly more energy storage than a PMSI, increasing system flexibility. The effect of the emissions-neutrality constraint in the absence of a carbon price is to reduce the quantity of storage purchased and reduce annual system emissions (~3%), with only minor increases in overall cost (~0.1%). In cases with a carbon price, storage does not tend to increase emissions and the emissions constraint does not tend to decrease storage investment. The emissions-neutrality constraint is seen to deliver similar emissions reductions even in a system with much higher renewable penetration (46%).