Game theoretical analysis of profitable strategies of energy storages

Abstract

As nations worldwide pursue carbon neutrality goals, the development of renewable energy industry is accelerating. However, the intermittent nature of renewable energy challenges grid stability. This highlights the crucial role of energy storage technologies. Rapid growth in the energy storage sector has revealed the issue of unprofitable storage systems, which troubles industry investors. To address relevant issues, this thesis systematically investigates potential approaches to enhance the profitability and sustainable development of the energy storage industry. First, we focus on optimal operational strategies and investment decisions for a monopolistic, profit-seeking energy storage aggregator. A quantitative comparison is conducted between regulated and deregulated market environments. This reveals the inherent trade-off the aggregator faces as both a profit-seeker and a public service provider. Energy storage facilities in deregulated markets are further categorized as grid-installed or self-installed. The quantitative relationship between these categories is rigorously analyzed. Numerical studies validate the theoretical results. Within the same model setting, we propose an original operational strategy and corresponding investment decision-making approach to enhance storage profitability. This method leverages day-ahead bidding information to optimize storage operations. Then, we extend the analysis to competitive scenarios. A stochastic game model is constructed to study the equilibrium formed by multiple risk-averse energy storage aggregators. Without convexity and continuity assumptions, we prove the existence of equilibrium. Because intraday market electricity price fluctuates as a martingale, this game model applies well to analyzing competition among storage operators in the intraday electricity market. This analysis sheds light on strategic differentiation in planning decisions under competitive market structures. In addition to analyzing storage operators as profit-seekers, we explore their societal benefits. Specifically, we examine their potential for procuring and reselling curtailed renewable energy. Focusing on the two main electricity pricing schemes widely applied globally, we propose an optimal planning strategy suitable for both pricing mechanisms. In summary, through systematic analysis spanning investment decision and operation strategy under both monopolistic and competitive environments, this thesis analyzes how to achieve profitability and social value for the energy storage industry. The findings provide insights for policymakers, regulators, and industry stakeholders navigating the transition towards carbon-neutral power systems facilitated by energy storage technologies.