Impact of energy storage systems on electricity market equilibrium

Ahmed S.A. Awad, J. David Fuller, Tarek H.M. El-Fouly, Magdy M.A. Salama

Research output: Contribution to journalArticlepeer-review

89 Scopus citations


Integration of large-scale energy storage systems (ESSs) is desirable nowadays to achieve higher reliability and efficiency for smart grids. Controlling ESS operation usually depends on electricity market prices so as to charge when the price is low and discharge when the price is high. On the other hand, the market-clearing price itself is determined based on the net demand, i.e., including energy storage output, at every hour. Therefore, it is crucial to develop a mathematical model to determine the optimal ESS operation as well as the market-clearing prices. The problem is formulated as a mixed complementarity problem (MCP) that allows the representation of special (incentive) prices, which cannot be represented in a single optimization model. The proposed model is useful for power system operators to determine the optimal storage dispatch simultaneously with the market-clearing price in addition to the conventional generation dispatch. The impact of energy storage size and location on market price, total generation cost, energy storage arbitrage benefit, and total consumer payment is further investigated in this paper. The latter analysis provides some guidelines for power system planners to identify the optimal size and location for installing large-scale ESSs.

Original languageBritish English
Article number6784378
Pages (from-to)875-885
Number of pages11
JournalIEEE Transactions on Sustainable Energy
Issue number3
StatePublished - Jul 2014


  • Energy storage systems (ESSs)
  • mixed complementarity problem (MCP)
  • smart grids


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