Economic Analysis of using Distributed Energy Storage for Frequency Regulation

Abstract

The need for a high ramping energy resource for frequency regulation is increasing due to the high penetration of intermittent and variable renewable energy sources, such as wind and solar, in the electricity grid. Traditionally, special generators have been used for frequency regulation. These generators can provide high capacity but have a very slow response time. Battery energy storage (BES) has gotten tremendous attention due to the advancement in technology. BES has a very fast response time, which makes it suitable for frequency regulation. In this paper, we perform an economic analysis of a distributed energy storage participating in the PJM and NYISO regulation markets. The distributed storage consists of many small consumers' installed batteries. A centralized entity at a microgrid level controls the distributed storage using our proposed algorithms. The economic analysis is performed from the perspective of individual storage owners. Our results show that the five-year net-present-value (NPV) of the consumers' investment is positive if the utility shares 30% (or above) of the regulation revenue with the storage owners and keeps the rest of the 70%.