An investigation of battery storage operating strategies in the context of smart cities
| DOI | https://doi.org/10.1108/IMDS-01-2022-0011 |
| Published date | 10 August 2022 |
| Date | 10 August 2022 |
| Pages | 2393-2415 |
| Subject Matter | Information & knowledge management,Information systems,Data management systems,Knowledge management,Knowledge sharing,Management science & operations,Supply chain management,Supply chain information systems,Logistics,Quality management/systems |
| Author | Xing Yao,Shao-Chao Ma,Ying Fan,Lei Zhu,Bin Su |
An investigation of battery storage
operating strategies in the context
of smart cities
Xing Yao
School of Economics and Management, Beihang University, Beijing, China and
Lab for Low-carbon Intelligent Governance (LLIG), Beihang University,
Beijing, China
Shao-Chao Ma
School of Economics and Management, China University of Geosciences,
Beijing, China
Ying Fan and Lei Zhu
School of Economics and Management, Beihang University, Beijing, China and
Lab for Low-carbon Intelligent Governance (LLIG), Beihang University,
Beijing, China, and
Bin Su
Energy Studies Institute, National University of Singapore, Singapore, Singapore
Abstract
Purpose –The ongoing urbanization and decarbonization require deployment of energy storage in the urban
energy system to integrate large-scale variable renewable energy (VRE) into the power grids. The cost reductions of
batteries enable private entities to invest energy storage for energy management whose operating strategy may
differ from traditional storage facilities. This study aims to investigate the impacts of energy storage on the power
system with different operation strategies. Two strategies are modeled through a simulation-based regional
economic power dispatch model. The profit-oriented strategy denotes the storage system operated by private
entities for price arbitrage, and the nonprofit-oriented strategy denotes the storage system dispatched by an
independent system operator (ISO) for the whole power system optimization. A case study of Jiangsu, China is
conducted. The results show that the profit-oriented strategy only has a very limited impact on the cost reductions of
power system and may even increase the cost for consumers. While nonprofit-oriented energy storage performs a
positive effect on the system cost reduction. CO
2
emission reduction can onlybe achievedunder a high VRE scenario
for energy storage. Integrating energy storage into the power system may increase CO
2
emissions in the near term.
In addition, the peak-valley spread is crucial to trigger operations of profit-oriented energy storage, and the
profitability of energy storage operator is observed to be decreasing with the total storage capacity. This study
provides new insights for the energy management in the smart city, and the modeling framework can be applied to
regions with different resource endowments.
Design/methodology/approach –The authors characterize two battery storage operating strategies of
profit- and nonprofit-oriented by adopting a simulation-based economic dispatch model. A simulation from 36
years of hourly weather data of wind and solar output from case study of Jiangsu, China is conducted.
Findings –The results show that the profit-oriented strategy only has a very limited impact on the cost
reductions of power system and may even increase the cost for consumers. While nonprofit-oriented energy
storage performs a positive effect on the system cost reduction. CO
2
emission reduction can only be achieved
under high VRE scenario for energy storage. Integrating energy storage into the power system may increase
CO
2
emissions in the near term. In addition, the peak-valley spread is crucial to trigger operations of profit-
Battery storage
operating
strategies
2393
This research is supported by China Postdoctoral Science Foundation [Grant No. 2022M710292], the
National Natural Science Foundation of China [Grant No. 71673019, No. 72122002, No. 72021001, No.
72034003] and the National Key Research and Development Programme of China [Grant No.
2020YFA0608603].
Declaration of interests: The authors declare that they have no known competing financial interests or
personal relationships that could have appeared to influence the work reported in this paper.
The current issue and full text archive of this journal is available on Emerald Insight at:
https://www.emerald.com/insight/0263-5577.htm
Received 9 January 2022
Revised 8 March 2022
7 May 2022
24 June 2022
Accepted 27 June 2022
Industrial Management & Data
Systems
Vol. 122 No. 10, 2022
pp. 2393-2415
© Emerald Publishing Limited
0263-5577
DOI 10.1108/IMDS-01-2022-0011
oriented energy storage, and the profitability of energy storage operator is observed to be decreasing with the
total storage capacity.
Originality/value –This study provides new insights for the energy management in the smart city, and the
modeling framework can be applied to regions with different resource endowments.
Keywords Battery storage, CO
2
emissions, Smart city, Power system, Operating strategy
Paper type Research paper
1. Introduction
Nowadays, more than half of the world’s population lives in cities, and it is expected that more
than 6 billion people will live in cities till 2050 (Harrison et al., 2010). The idea of smart city
emerges to improve the quality of life of the citizens by providing intelligent services. One of
the main problems confronts by the designs of smart city is its energy supply system. Since
major cities, which occupy only 5% of the Earth’s land, account for 75% of the world’s fossil
fuel usage (Kim et al., 2021). Sustainable development in a smart city requires the future urban
energy system planning in line with the long-term target of limiting global warming. It
implies that the current energy system is expected to undergo a profound transition. Scholars
and organizations are discussing the feasibility of achieving a 100% renewable energy mix to
accomplish the low-carbon transition (REN21, 2017).
Wind and solar power are expected to play an important role in the future energy supply
system. However, due to the inherent intermittency, variability and uncertainty of wind speed
and solar irradiance, integrating large-scale variable renewable energy (VRE) into the urban
power systems still faces a list of challenges, such as further difficulties in thepower balance,
poor power quality of VRE and weak interconnection between the central grid and the VRE
generator (Mararakanye and Bekker, 2019). Some studies have quantified these challenges into
indirect cost of VRE, such as “hidden costs (Simshauser, 2011)”or “integration costs (Yao et al.,
2020)”for VRE.
Adopting energy storage technologies could be a viable solution of integrating VRE into a
fully decarbonized energy system (Abbott and Cohen, 2020;Peker et al.,2018). There have
already been several energy storage options that are available to provide various energy
services in the power system, such as pumped hydro, compressed air, flywheels, batteries, etc.
(Pierpoint, 2016).Currently, pumpedhydro storagehas accountedfor more than 90%of the total
installed capacity of energy storage worldwide. However, further developmental potentials of
pumped hydro storage is quite limited and highly restricted by geographical conditions;
therefore, the future urban energy system may rely on other emer ging energy storage options.
Battery storage technologies are attracting extensive attention in the recent decade.
Currently, lithium-ion battery (LiB) energy storage has the second-largest share in the global
energy storage market, and the LiB pack price was reported to drop by 73% from 2010 to
2016. The price is expected to drop 93% by 2030, which is to some extent promoted by the
sales of electric vehicles (Omrani and Jannesari, 2019). Estimations also show that in a 5- to 6-
year horizon, battery storage technologies would become economically attractive (Martinez-
Bolanos et al., 2020). By that moment, private entities will be motivated to engage in the
energy management in an urban power system. Price arbitrage becomes feasible through
private electric vehicles or household energy storage system. It will change the operating
strategies of traditional energy storage, as well as change the way of power system operation
(Omrani and Jannesari, 2019). Energy management or price arbitrage using battery storage
for private entities may not be in accordance with the stability requirement of the power grid.
Since 2012, smart city pilot program has been initiated in China. One of its key missions is
to establish a smart and sustainable urban energy system. As the largest electricity-
consuming country (IEA, 2019), China has been promoting a cleaner power system transition
for years by increasing renewable power penetration. Since 2011 and 2015, the cumulative
IMDS
122,10
2394
To continue reading
Request your trial