We present a methodology for assessing the economic impact of power storage technologies. The methodology is founded on classical approaches to the optimal stopping of stochastic processes but involves an innovation that circumvents the need to,
ex ante
, identify the form of a driving process and works directly on observed data, avoiding model risks. Power storage is regarded as a complement to the intermittent output of renewable energy generators and is therefore important in contributing to the reduction of carbon-intensive power generation. Our aim is to present a methodology suitable for use by policy makers that is simple to maintain, adaptable to different technologies and easy to interpret. The methodology has benefits over current techniques and is able to value, by identifying a viable optimal operational strategy, a conceived storage facility based on compressed air technology operating in the UK.
This article is part of the themed issue ‘Energy management: flexibility, risk and optimization’.
Intelligent Energy Management of Compressed Air Systems
