EURO 2024 Copenhagen
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2812. Investment decisions in Energy Storage Systems: a real options approach

Invited abstract in session MC-33: Dynamics of the Firm II, stream Optimal Control Theory and Applications.

Monday, 12:30-14:00
Room: 42 (building: 303A)

Authors (first author is the speaker)

1. Marta Castellini
Department of Economics and Management, University of Padua, Fondazione Eni Enrico Mattei
2. Chiara D'Alpaos
Department of Civil Environmental and Architectural Engineering, University of Padova
3. Fulvio Fontini
Department of Economics and Management, University of Padua
4. Michele Moretto
Ecomics and Management, University of Padova

Abstract

Renewable energy generation plays a crucial role in the energy transition. Nevertheless, as many Renewable Energy Sources (RES) are intermittent, specifically photovoltaic (PV) generation, there are often mismatches between energy production and consumption. These mismatches can be partially reduced by storage systems.
In this paper we investigate the investment decision in a PV power plant coupled with a Battery Energy Storage System (BESS), namely an Energy Storage System (ESS). In our setting, the BESS is connected to the national grid and the PV plant: energy can be produced, purchased from the grid, stored, self-consumed, and fed into the national grid.
PV production and energy consumption loads evolve stochastically over time. In addition, BESS are costly, and energy stored has an opportunity cost, which depends on the prices of energy purchased from the national grid and energy fed into the grid, respectively. Nonethless, BESS can significantly contribute to increase ESS managerial flexibility and, in turn, ESS value. In detail, we investigate the optimal BESS capacity that maximizes ESS expected net present value. We also analyze ESS management costs to provide insights on ESS optimal management strategy.

Keywords

Status: accepted

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