Scientists from the University of Seville have developed real-time optimization models showing that electricity storage in Spain may be approaching its economic limit, with cumulative capacities above 32 GWh depressing prices and undermining project profitability.

From ESS News

Traditionally, storage planning has relied on production cost models or capacity expansion models. The former optimize dispatch based on levelized costs, while the latter assess investment decisions in a marginal pricing framework, typically assuming that thermal generation sets market prices. In both approaches, however, storage is imperfectly represented, particularly in terms of its real interaction with market prices.

Researchers from the University of Seville propose an alternative methodology based on a Real-Time Optimization (RTO) model, which uses actual day-ahead market clearing curves as a proxy for demand elasticity. The objective is to estimate expected net revenues from new battery energy storage system (BESS) installations and to assess how incremental capacity additions affect wholesale prices and storage profitability.

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