Open Access

REVIEW

Energy Storage Operation Modes in Typical Electricity Market and Their Implications for China

by Junhui Liu¹, Yihan Zhang¹, Zijian Meng², Meng Yang¹, Yao Lu¹, Zhe Chai¹, Zhaoyuan Wu^2,*

1 State Grid Henan Economic Research Institute, Zhengzhou, 450052, China
2 School of Electrical and Electronic Engineering, North China Electric Power University, Beijing, 102206, China

* Corresponding Author: Zhaoyuan Wu. Email:

Energy Engineering 2024, 121(9), 2409-2434. https://doi.org/10.32604/ee.2024.051554

Received 08 March 2024; Accepted 19 April 2024; Issue published 19 August 2024

Abstract

As the Chinese government proposes ambitious plans to promote low-carbon transition, energy storage will play a pivotal role in China’s future power system. However, due to the lack of a mature electricity market environment and corresponding mechanisms, current energy storage in China faces problems such as unclear operational models, insufficient cost recovery mechanisms, and a single investment entity, making it difficult to support the rapid development of the energy storage industry. In contrast, European and American countries have already embarked on certain practices in energy storage operation models. Through exploration of key issues such as investment entities, market participation forms, and cost recovery channels in both front and back markets, a wealth of mature experiences has been accumulated. Therefore, this paper first summarizes the existing practices of energy storage operation models in North America, Europe, and Australia’s electricity markets separately from front and back markets, finding that perfect market mechanisms and reasonable subsidy policies are among the main drivers for promoting the rapid development of energy storage markets. Subsequently, combined with the actual development of China’s electricity market, it explores three key issues affecting the construction of cost-sharing mechanisms for energy storage under market conditions: Market participation forms, investment and operation modes, and cost recovery mechanisms. Finally, in line with the development expectations of China’s future electricity market, suggestions are proposed from four aspects: Market environment construction, electricity price formation mechanism, cost sharing path, and policy subsidy mechanism, to promote the healthy and rapid development of China’s energy storage industry.

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Keywords

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