Electric Energy Time-shift (Arbitrage)

Electric energy time-shift involves purchasing inexpensive electric energy, available during periods when prices or system marginal costs are low, to charge the storage system so that the stored energy can be used or sold at a later time when the price or costs are high. Alternatively, storage can provide similar time-shift duty by storing excess energy production, which would otherwise be curtailed, from renewable sources such as wind or photovoltaic (PV). The functional operation of the storage system is similar in both cases, and they are treated interchangeably in this discussion.

Technical Considerations

Storage System Size Range: 1 – 500 MW
Target Discharge Duration Range: <1 hour
Minimum Cycles/Year: 250 +

Storage used for time-shifting energy from PV or smaller wind farms would be in the lower end of the system storage size and duration ranges shown above, whereas storage for arbitrage in large utility applications or in conjunction with larger wind farms or groups of wind and/or PV plants would fall in the upper end of these ranges.

Both storage variable operating cost (non-energy-related) and storage efficiency are especially important for this service. Electric energy time-shift involves many possible transactions with economic merit based on the difference between the cost to purchase, store, and discharge energy (discharge cost) and the benefit derived when the energy is discharged.

Any increase in variable operating cost or reduction of efficiency reduces the number of transactions for which the benefit exceeds the cost. That number of transactions is quite sensitive to the discharge cost, so a modest increase may reduce the number of viable transactions considerably. Two performance characteristics that have a significant impact on storage variable operating cost are round-trip efficiency of the storage system and the rate at which storage performance declines as it is used.

In addition, seasonal and diurnal electricity storage can be considered as a bulk service. It can be very useful for wind or PV if there are significant seasonal and diurnal differences.