CR1625 battery.Energy storage economics research

　　Energy storage economics research

　　With the rapid growth of renewable energy power generation, the contradiction between load and power generation has become increasingly prominent. Taking Liaoning Province as an example, at the end of July 2012, the total installed capacity of Liaoning Province reached 36.6GW, of which 4.56GW was wind power generation, accounting for 12.46%. Wind power has become the second power source in the province after thermal power. Wind power generation is expected to reach 13.8GW by 2020, accounting for 20.5% of total installed capacity. Since wind power, solar energy and other new energy sources cannot be artificially controlled, resulting in a mismatch between wind power and electric load, the problem of wind power grid connection is the main bottleneck. The problem of wind power grid connection is more prominent in my country's Three North Regions, especially the northeast and northwest regions, where wind resources are concentrated. However, the local load demand is very low and the external transmission channels are limited. Therefore, the amount of wind power abandoned every year remains high.

　　The volatility and intermittency of new energy sources such as wind power and photovoltaics affect the grid connection of new energy sources. Energy storage systems can smooth output, improve power quality, and cut peaks and valleys, which can provide an effective solution for new energy power generation [1] .

　　The domestic electricity market system limits the development of the energy storage industry to a certain extent. Take the U.S. frequency regulation market as an example. In the U.S.'s electricity market-based transactions, power frequency regulation has a higher price when demand is strong. Energy storage systems have the potential to make profits due to their rapid response characteristics. However, domestic energy storage systems cannot achieve profitability because there is no market mechanism. At the same time, the energy storage industry has just started in China, and its industrial development is in the project demonstration stage. Typical demonstration projects include the State Grid Corporation of China's Zhangbei Wind and Solar Energy Storage and Transmission Integration Project. The project uses an 18MW lithium-ion battery and a 2MW flow battery to conduct comprehensive experiments on peak shaving, frequency modulation and other functions of the energy storage system. Guodian Group's Woniushi Wind Farm uses 5MW flow battery energy storage, which is currently the largest flow battery energy storage demonstration project in China. In addition, power companies such as China Southern Power Grid have built demonstration projects in energy storage applications. At the same time, industry policies and regulations are not yet complete. Compared with the development of domestic environmental protection industries such as desulfurization and denitrification, the country does not yet have supporting policies for energy storage systems. At present, national policies are still focused on supporting demonstration projects, so there are no effective economic models and analysis methods.

　　Under the current domestic system, forming a comprehensive and effective method to evaluate the value of energy storage systems is the main discussion content of this article. Academician Yang Yusheng proposed an economic criterion for energy storage, which can comprehensively evaluate the economics of energy storage. Analysis of criteria shows that pumped hydro energy storage, compressed air energy storage, flow batteries, and lithium-ion batteries are the best choices.

　　The article mainly uses compressed air energy storage technology as an example in the analysis. Starting from the analysis of the domestic power market system, various benefits related to the energy storage system are introduced. Then the potential benefits of the energy storage system in addition to the current domestic power market are analyzed, and the two parts of benefits are superimposed to form the overall benefit of energy storage. This article refers to the criteria for energy storage economics mentioned in the literature, and re-establishes a model to evaluate the economics of energy storage to analyze energy storage technologies such as compressed air energy storage and flow battery energy storage. Finally, through the calculation and analysis of the new model, the development of the energy storage industry is discussed and corresponding conclusions and suggestions are put forward.

　　1Domestic electricity market

　　The domestic electricity market is divided into six major regional electricity markets, namely North China, Northeast China, East China, Central China, Northwest China and South China. In 2002, the domestic power system reform achieved the separation of factories and grids, and the power market became a single buyer, also known as a power generation competition model. At present, the Northeast Power Grid and others have gradually launched pilot projects for direct power purchase, and the power market reform is constantly developing towards a wholesale competition model [2].

　　With the institutional changes in the electricity market, China's electricity price reform has also undergone a series of explorations and practices, and has achieved remarkable results. The long-term goal of electricity price reform is: with the deepening of the power system reform, electricity prices are divided into on-grid electricity prices, transmission prices, distribution prices and sales electricity prices. On-grid electricity prices and sales electricity prices are determined by market competition, while transmission and distribution prices are set by government departments.

　　The current sales electricity price consists of three parts: on-grid electricity price, transmission and distribution price and line loss [2]. The calculation formula is:

　　The on-grid electricity price is the price at which power generation companies sell electricity to the grid. It is generally stipulated by the National Development and Reform Commission and other government departments. Different provinces and cities implement different prices for thermal power; wind power implements different benchmark electricity prices based on different wind resource conditions; nuclear power implements benchmark electricity prices; photovoltaic, Water and electricity are subject to a one-factory-one-price pricing mechanism.

　　There is no clear formation mechanism for transmission and distribution prices, so the power grid company determines them based on the difference between the buying and selling prices.

　　Under the current electricity price system, the price of ancillary services is included in the transmission and distribution price [3]. There are two compensation methods for regional ancillary services: power compensation and value compensation. Electricity compensation refers to a compensation method that the power grid provides to power generation companies that have performed well in auxiliary services by increasing power generation, while at the same time reducing power generation by a certain amount to power plants that have performed poorly in auxiliary services. The principle of value compensation is similar to that of electricity compensation. The difference is that value compensation uses ancillary service funds to subsidize power generation companies. The compensation method for ancillary services emphasizes the principle that ancillary services should be provided by power generation companies and have nothing to do with power grid companies. But the cost of pumped hydro storage is currently borne by the grid company.

　　2Potential benefits of energy storage

　　2.1 Classification of potential benefits from energy storage

　　The benefits of energy storage were divided into 5 major categories and 17 types in a study by Sandia Laboratory, as shown in Table 1 [4]. The application analysis of energy storage systems on the power generation side includes power generation capacity, peak shaving and valley filling, load tracking, and regional frequency regulation. This classification method can be used to analyze domestic energy storage application cases. In addition, adding energy storage devices to the power system can improve the power generation efficiency of thermal power plants to a certain extent, so this part can also be counted as the income of the energy storage system.

　　Potential benefits refer to the fact that all benefits cannot be quantified under the current power market conditions. When analyzing the benefits of an energy storage system, we can only conduct a semi-quantitative analysis by referring to existing calculated values. The specific circumstances of different benefits will be analyzed in detail below.

　　2.2 Power generation capacity

　　Power generation capacity can save construction investment in conventional power generation projects such as thermal power. The commissioning of energy storage power stations can increase the power generation capacity of the power system to cope with peak loads. Taking the Shanghai area as an example, during the period from 2004 to 2006, in order to solve the peak load of 183.25 hours per year, the annual construction cost of the power grid in the Shanghai area was as high as 2,1010 yuan. The utilization rate of this part is less than 2%. The application of energy storage systems can save a lot of investment. Only the construction cost of power plants, taking thermal power as an example, can save 4,500 yuan/kW.

　　2.3 Improve power generation efficiency

　　This application is not listed in Table 1, but has a certain impact on the power system. If energy storage systems are widely used, thermal power can operate under optimal working conditions, thereby reducing coal consumption of thermal power. Coal consumption accounts for about 70% of the cost of thermal power generation. Taking a 1GW thermal power plant in Zhejiang Province as an example [5], from 50% output power to full power, coal consumption in power supply can be reduced by 10%, so the total cost is reduced by about 7%. . Li Shidong et al. [6] also mentioned in their article that pumped-storage power stations can reduce coal consumption for thermal power supply by 5% [7].

　　2.4 Peak shaving and valley filling

　　Since there are no peak and valley electricity prices on the domestic power generation side, the benefits of peak shaving and valley filling can be indirectly measured through the prices of pumped storage power stations. Document No. 71 of 2004 of the National Development and Reform Commission mentioned that the operation of pumped storage power stations is included in the transmission and distribution costs of the power grid. There are three ways to measure the electricity price of pumped-storage power stations: single electricity price system, two-part electricity price and leasing electricity price. The main purpose of the 3 methods is to cover the cost of pumped storage power stations. Take the two-part electricity price as an example. The two-part electricity price consists of capacity electricity price and electricity electricity price. The capacity electricity price is used to cover the construction cost of the power station, and the electricity electricity price is used to cover the operating cost. For example, the annual capacity electricity price of Tianhuangping Power Station in Anhui is 470￥/kW, and the electricity price is 0.1462￥/kW.

　　2.5 Load tracking and frequency modulation

　　Energy storage systems can provide frequency regulation services for power systems [8-9]. China Southern Power Grid stipulates in relevant rules that the standard frequency regulation fee for thermal power automatic generation control (AGC) is 32.7 yuan/kW.

　　3 Economic criteria for energy storage systems

　　In the article "Criteria for Economic Benefits of Scale Energy Storage Devices", Academician Yang Yusheng simplified the boundary conditions of economic analysis and established a simple model for the first time to analyze the economics of energy storage systems [10]. Factors such as energy storage electricity price, battery efficiency, initial investment, operating cost, discharge depth and cycle life are considered in the model. The calculation formula is:

　　,

　　4.2 Sources of income

　　Based on the above model, when analyzing the rationality of income sources, it is necessary to clarify the sources of various incomes.

　　Related to the benefits of energy storage systems are power generation companies, grid companies and governments in the power system. The source of income from the energy storage system should be shared by the three parties. Chen Jianbin et al. [11] also mentioned the interest relationships of all parties in the energy storage development model.

　　The income from the energy storage system is clearly related to the improvement of power generation efficiency of power generation companies, so it is more reasonable for power generation efficiency income B2 to be provided by power generation companies. Ancillary service income B3 and B4 belong to the functional scope of the power grid, and it is more reasonable for the power grid enterprise to provide them. At the same time, judging from the situation of pumped storage power stations that currently occupy an absolute position in energy storage, the cost of the auxiliary services provided by pumped storage is also borne by the power grid company. Regarding the potential income B1 of power generation capacity, since this income is beneficial to both the power grid and power generation, it is difficult to determine which side should bear it more reasonably, and other mechanisms need to be formed.

　　5 discussions

　　Taking compressed air energy storage and liquid flow vanadium battery energy storage technology as examples, a semi-quantitative estimation analysis is conducted based on the above model. In order to further simplify the impact of the model on the ancillary services part, only B4 that can currently be quantified is calculated, and Igov is set to zero. Considering the difference in scale of energy storage systems, the units in the calculation are simplified to kilowatt-level energy storage devices. The relevant parameters are shown in Table 3 [12], and the calculation formula is

　　6 Conclusion

　　Through semi-quantitative analysis and optimization model, a method can be found to reasonably analyze the economic value of energy storage. This method includes all potential benefits of the energy storage system and allows for a more in-depth analysis of the economics of energy storage. The following conclusions can be drawn from the analysis: 1) The advancement of electricity marketization helps to quantify and realize the potential benefits and value of energy storage; 2) Encouraging the application of energy storage technology on the power generation side can not only increase benefits (waste heat utilization), but also improve Thermal power efficiency; 3) The development of energy storage technology and industry still requires certain incentive policies.

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