Breakeven analysis of energy storage systems in PJM energy markets

Abstract

Energy arbitrage is attracting interest of Energy Storage Systems developers and owners to provide net revenue in transmission and distribution systems. We have analyzed the potential revenue of a generic Energy Storage System (ESS) within the electricity market of PJM in 8 deferent locations where such technology is already installed. We used hourly Day-Ahead and Real-time locational marginal prices over the seven-year period 2008–2014, assuming a price-taking dispatch with perfect foresight. The charge-discharge profiles were optimized to determine The minimum potential revenue for 1 MW system for 70% round trip efficiency in those 8 locations. We performed a sensitivity analysis to verify the dependence on rated discharge duration and its variation over the years. We determined the breakeven overnight installed cost below which energy arbitrage would be profitable.