Strategic Guidelines for Battery Energy Storage System Deployment: Regulatory Framework, Incentives, and Market Planning

Abstract

This research addresses strategic recommendations regarding the applications of battery energy storage systems (BESS) in the context of the deregulated electricity market. The main emphasis is on regulatory dimensions, incentive mechanisms, and the provision of marketable storage services. The study’s findings demonstrate that battery energy storage systems (BESS) have distinct characteristics that challenge their conventional classification as a load or generator within power systems. The study additionally emphasizes the insights, lessons learned, and good practices gained from early adopter countries in implementing energy storage systems (ESS). These insights include the importance of establishing a precise definition of ESS, promoting collaborative engagement with relevant stakeholders, and developing a series of incentive strategies. The results show that nations that pioneered BESS’s application in their electricity matrices have effectively promoted storage services in deregulated markets, employing storage assets for various purposes such as peak reduction, frequency regulation, renewable energy support, and energy arbitrage applications. These applications underline the potential of BESS to increase grid stability and minimize exposure to risk and volatility in the revenues of storage agents in deregulated markets.

Investment Decision for Long-Term Battery Energy Storage System Using Least Squares Monte Carlo

“…Table 1 lists the ESS facilities to be configured by 2036 based on the basic plan for electricity supply and demand [11]. An ESS is used effectively for peak shaving, frequency regulation, and renewable energy support [12]. The role of an ESS is classified depending on its duration; a short-term ESS supplies power within a short period or shifts the surplus power to peak demand hours.…”