Sizing Co-located Storage for Uncertain Renewable Energy Sold Through Forward Contracts

TL;DR

This paper develops a stochastic model to determine optimal sizing and operation of co-located energy storage for wind power producers participating in forward contracts, aiming to maximize long-term profit.

Contribution

It introduces a novel high-level stochastic steady-state model for sizing and operating co-located storage in renewable energy markets, calibrated with real data.

Findings

Optimal storage sizing depends on contract prices and storage costs.

Storage improves profit margins for wind power producers.

Sensitivity analysis reveals key parameters affecting storage value.

Abstract

In this paper, we propose a high-level Stochastic steady-state model to analyze the value of co-located energy storage systems for wind power producers that participate in an electricity market through Forward or Day Ahead contracts. In particular, we try to find optimal sizing and contracting and stationary operating policies for profit maximization in the long-run. We obtain a stylized model calibrated to actual wind power production and electricity wholesale price data that allows us to asses the value of storage size and perform sensitivity analysis on key parameters such as contract prices, storage cost and storage efficiency.