A Capacity Compensation Mechanism for Long-term Energy Storage in Spot Market

Long-term energy storage, with its ability for long-duration energy storage and seasonal energy transfer, is considered a solution to the seasonal mismatch between the source and load. To promote the development and investment in long-term storage, it is essential to examine market approaches that can help recover the investment costs of long-term storage. However, long-term storage systems experience far fewer charging and discharging cycles than short-term storage and can hardly recover their cost from the current energy market mechanisms. To this end, this paper utilizes long-term storage’s capability of providing capacity support and proposes a novel capacity compensation mechanism for long-term storage. By considering the monthly average charge and discharge power of long-term storage, the mechanism calculates the capacity contribution and gives compensation revenue based on the nodal price during peak periods. To guide the construction of long-term storage, a planning model of long-term storage in the spot market environment while considering the proposed capacity compensation mechanism is formulated. Test cases show that long-term storage can recover its cost with the proposed capacity compensation mechanism and operate for a long time.