Arbitrage Assessment of Pumped Hydro Storage in Power Spot Market

Pumped hydro storage is one of the main flexible resources of the power system. The price formation mechanism and arbitrage model of pumped storage power plant is one of the key challenges for its participation in the power spot market. In the paper, a method for arbitrage assessment of pumped hydro storage in power spot market is proposed. A time-series production simulation model of power spot market with pumped storage is proposed for quantifying its annual arbitrage revenues. The technical characteristics of pumped hydro storage is model in the optimization model for optimal scheduling. Arbitrage revenue of pumped hydro storage is quantified in terms of market price, pumped energy and generation. Case study shows that pumped hydro storage has higher economics and shorter payback cycles in power markets.