Korean Energy Economic Review ISSN:1599-7057(Print) 에너지경제연구

The traditional concern in the power market has been how to reduce peak demand to improve long-term supply efficiency. Along with the expansion of renewable generation, a new concern in the power market is how to respond cost-effectively to the uncertainty of renewable generation. Energy storage is a resource that can provide effective solutions to both these problems through shifting load and providing reserve. This study analyzed the effective use of energy storage when dynamic pricing and critical peak pricing under different supply curves in the Korean power system in 2030 are considered together with the stochastic renewable generation. The main results of this study are as follows. First, under Korea’s elastic supply curve, energy storage have a greater incentive to provide reserve, and if the critical peak pricing is applied, load shifting becomes an attractive option. Second, when storages are used to lower the mean net load, then it does not represent true peak reduction effect because it disregards the worst renewable generation scenario. Third, the peak reduction effect of the storage should be evaluated on the basis of maximum net load, and in order to effectively achieve reduction of maximum net load, storage capacity should be effectively allocated between shifting load and providing reserve is required. When an incentive system, in which storage capacities are optimally allocated to increase the efficiency of electricity supply, offered in the market, costs to achieve carbon net zero can be effectively reduced.