Beyond Price-Taker: Multiscale Optimization of Wind and Battery Integrated Energy Systems

TL;DR

This paper demonstrates that traditional price-taker models significantly underestimate the economic value of wind and battery integrated energy systems, emphasizing the need for multiscale optimization to accurately assess their market impact.

Contribution

It introduces a multiscale optimization framework that moves beyond the price-taker assumption, providing more accurate techno-economic analysis of hybrid renewable and storage energy systems.

Findings

Price-taker models overestimate revenue by up to 178%.

Net present value is overestimated by up to 50%.

Introducing storage affects market dynamics and strategic bidding.

Abstract

Decarbonizing global energy systems requires extensive integration of renewable energy into the electric grid. However, the intermittency and variable nature of wind and other non-dispatchable renewable resources make integration a great challenge. Hybridizing renewables with energy storage to form integrated energy systems (IESs) helps mitigate these concerns by improving reliability and resiliency. This paper systematically studies the limitations of the prevailing price-taker assumption for techno-economic analysis (TEA) and optimization of hybrid energy systems. As an illustrative case study, we retrofit an existing wind farm in the RTS-GMLC test system (which loosely mimics the Southwest U.S.) with battery energy storage to form an IES. We show that the standard price-taker model overestimates the electricity revenue and the net present value (NPV) of the IES up to 178% and 50%, respectively, compared to our more rigorous multiscale optimization. These differences arise because introducing storage creates a more flexible resource that impacts the larger wholesale electricity market. Moreover, this work highlights the impact of the IES has on the market via various strategic bidding, and underscores the importance of moving beyond price-taker for optimal storage sizing and TEA of IESs. We conclude by discussing opportunities to generalize the proposed framework to other IESs, and highlight emerging research questions regarding the complex interactions between IESs and markets.