A comparative assessment of demand response and energy storage resource economic and emission impacts

Over the past decade, there has been a resurgence of interest among system operators, policy makers and other grid stakeholders in the expanded utilization of energy storage (ES) and demand response resources (DRRs) to address power system economic and environmental concerns. In this work, we construct a general ES resource (ESR) model, which encompasses DRRs as a special case and explicitly represents the physical and economic attributes of integrated grid-scale ES and DRRs and aggregations of smaller-scale ES and DRRs. We deploy this model in a market simulation framework to perform a systematic side-by-side comparison of the economic and emission impacts of ES and DRRs in networks operated/controlled by an independent system operator/regional transmission organization and in its associated day-ahead markets. This analysis points out the limits to the penetrations below which an added MW of ES or DRR no longer brings about decreases in buyer payments and that the benefits that accrue to DRRs are disproportionately larger than the benefits to buyers and ESRs. Further, we find that ES and DRRs have little impact on reducing system-wide emissions. In fact, we find that their utilization may even result in emission increases in some cases. These findings provide insights into nature of the ES and DRR market impacts which are useful for grid stakeholders interested in the integration of appropriate penetrations of such resources.