Operation Strategy for Maximizing Revenue of an Energy Storage System with a Photovoltaic Power Plant Considering the Incentive for Forecast Accuracy in South Korea

Abstract

Adequate policies or incentives are needed to support investment in renewable energy industries. However, renewable power plant operators in South Korea may face the risk of finding it difficult to recoup their capital cost in the absence of a peak-biased incentive for the power plant with energy storage systems (ESS). Incentives for the forecast accuracy of the power plant will be adopted after the abolition of the incentive. This study explores the impact of incentives on power plant operations. In this study, we propose an ESS optimization model combined with a photovoltaic power plant. We design a coordinated model of the power plant to model the structures of revenues and costs based on actual power generation and a forecast error ratio. Optimization problems from the model are formulated as mixed integer linear programming to maximize revenue with the incentive for forecast accuracy. The revenue of the incentive is designed to reflect the unit price of the incentive, varying with the forecast error ratio. The effects of incentive adoption are evaluated in comparison with the absence of incentives.