Energy Storage as a System Resource
The origins of the electric industry can be traced back to the invention of the battery. However, Energy Storage Systems (ESS) have never been considered as a part of the electricity supply chain. Even though there has been an increase of government mandated storage investments in power grids, market driven investments are still lacking sustainable business models. Now, with the possibility that cost reductions of the technology make it viable for widespread utilization, multiple efforts have been devoted by the academia and industry to design its incorporation into electricity markets. A large majority of the proposals have been devoted to develop mechanisms for their incorporation in ancillary services markets or for arbitrage, considering storage as another market player, both still with little success in providing sustainable benefits to energy consumers and investors alike. In this paper, we demonstrate that Large Scale Energy Storage excels when incorporated as a service provider in electricity markets. Our proposal considers ESS as a grid resource, available to the ISO to achieve the optimal mix of resources in the day ahead dispatch. We demonstrate that in the Colombian system, a large ESS used in this manner may achieve high benefit-cost ratios. The results also indicate that current market designs need to evolve in order to take better advantage of energy storage and renewable energy resources.