Four essays on economic analysis on increased wind power and battery energy storage system in restructured markets-in South Korea and Electric Reliability Council of Texas

Open Access
Cho, Joohyun
Graduate Program:
Energy and Mineral Engineering
Doctor of Philosophy
Document Type:
Date of Defense:
August 21, 2015
Committee Members:
  • Andrew Nathan Kleit, Dissertation Advisor
  • Andrew Nathan Kleit, Committee Chair
  • Seth Adam Blumsack, Committee Member
  • Zhen Lei, Committee Member
  • George Young, Committee Member
  • energy storage system
  • windpower
  • hotelling's rule
Electricity is an essential energy in our daily lives while it faces challenges from generation resources, emergence of new technology, and new policies in the electricity market. Renewable energy resources enter electricity markets market, reducing wholesales market prices replacing high cost generators. For new technology, some battery energy storage system (ESS) system technologies have been developed to be eligible to be used to serve energy and ancillary service to the grid. In addition, new policies are introduced to the market, which open opportunities for renewable energy and battery ESSs. Renewable Portfolio Standards (RPS) requires more renewable energy should be used in generating electricity, while FERC Order 784 provides higher profitability potential due to technology’s fast ramp-up speed. This dissertation explores wind power in the South Korean market and battery ESS in the Korean and Texas region. Chapter 2 provides an analyze the effect of increased wind penetration on system marginal prices (SMP) in South Korea’s electricity market, with simulating an increase in wind penetration consistent with Korea’s RPS targets and an assumption on demand elasticity. Chapter 3 to 5 discuss on economic analysis on operating battery ESS considering it as an exhaustible resource, focusing on its limited life cycle. Hotelling’s rule(1931) is employed to keep the resource from being depleted too fast or too slow. A three-staged approach is applied to calculate NPV of revenues generated given life time and life cycles. Chapter 3 presents economic analysis of using battery ESS in South Korean market for energy service. Chapter 4 and 5 employs backward induction to capture opportunity cost of using the battery, assuming using it for both reserve and energy services. Empirical price data on reserve and energy service from Electric Reliability Council Of Texas is used for economic analysis. Chapter 4 examines profitability when the battery has the single discharge opportunity in the day while chapter 5 extends it to multiple discharging opportunities in the day.