A Novel Capacity Market Model With Energy Storage

Electricity jurisdictions procure generation capacity requirements competitively which maintains investment flows into the electricity system infrastructure. The capacity market auction is one of such competitive capacity procurement methods. It is challenging to consider energy storage (ES) capacity offers in capacity markets due to complex capacity contribution characteristics and lack of explicit mechanisms to integrate them. However, ES capacity can be used to manage the system peak demand. ES can substitute for peaker plants, especially if the demand curve is kurtosis. This paper proposes novel ES capacity contribution formulas and a comprehensive capacity auction model which is designed to consider capacity offers including energy-limited technologies such as ES. After all offers are converted to unforced capacity (UCAP), their energy limitations do not affect bid selection in the market. The proposed novel ES UCAP computation formulas consider power capacity, energy capacity and operational attributes. This paper also presents the results of a case study with three capacity supply offers and a case study based on actual Ontario system data. A detailed sensitivity analysis is also included in the paper to show the validity of the proposed ES UCAP formulas in the auction model. The proposed formulas provide significant benefits in successfully procuring ES capacity offers.