Comparing Participation Models in Electricity Markets for Hybrid Energy-Storage Resources

Wholesale electricity markets are designing market-participation models for hybrid resources that consist of energy storage and generation. This paper investigates the strategic behavior under two commonly proposed market-participation models of a hybrid resource that consists of solar and energy storage. The first is co-located hybrid resource, wherein the solar and energy storage submit separate offers. The second is integrated hybrid resource, wherein the solar and energy storage provide a single integrated offer and the market operator treats the resource as a single unit. We employ a bi-level stochastic optimization where the upper-level determines the hybrid resource's offers, and the lower-level represents market clearing by the market operator under different uncertain operating conditions. The model is applied to a simple example and to a real-world case study that is based on Alberta's electricity system. Results demonstrate that in most cases the two market-participation models are comparable. Co-located hybrid resource yields slight hybrid-resource- and generator-profit increases and offsetting social-welfare losses compared to integrated hybrid resource.