Independent energy storage takes the first step in participating in the electricity spot market

China Energy Storage Network News: At the end of February and the beginning of March 2022, Liuge Guotou Energy Storage Power Station, Tengyuan Huadian Energy Storage Power Station, Guanjia Three Gorges Energy Storage Power Station and Quanfu Huadian Energy Storage Power Station in Shandong Province successively completed registration and publicity at the Power Trading Center, and officially became trading entities in Shandong Province's electricity spot market. These four power stations have since become the first batch of independent energy storage power stations participating in the electricity spot market in the country.

The Shandong power spot market will start a long-term continuous settlement trial run from January 1, 2022. To facilitate the participation of energy storage, the spot market trading rules for 2022 will also be adjusted accordingly, adding a number of new contents such as the access, registration, clearing order, capacity compensation, and settlement of independent energy storage facilities to participate in the market.

According to the "Shandong Electricity Spot Market Trading Rules (Trial) (2022 Trial Version V1.0)", the charging power of independent energy storage power stations should not be less than 5 megawatts, and the continuous charging time should not be less than 2 hours. The frequency regulation auxiliary service market is operated separately from the spot market and coordinated. Energy storage power stations can choose to participate in the frequency regulation market or participate in the electricity market in a self-dispatching mode.

In the electric energy market, energy storage power stations report their output but not their quotation, and are given priority in clearing out the market under the conditions of safe and stable operation of the power grid and the consumption of new energy. In the frequency regulation market, energy storage power stations must bid on the same platform as power generators. In terms of settlement, independent energy storage power stations are included in the wholesale market settlement on the power generation side, and enjoy the same capacity compensation as power generators.

In 2021, Shandong Province issued a support policy that allowed energy storage to be cleared first and compensated at a fixed price when participating in the peak-shaving auxiliary service market, and rewarded priority power generation plans, so that energy storage power stations could profit from power generation rights trading. However, during the operation of the spot market, the peak-shaving market no longer operated, and the original policy no longer applied. Therefore, Shandong Province chose to take a new path and promote energy storage to participate in the electricity spot market.

In the spot market environment, independent energy storage power stations will have more flexible ways to make profits. The frequency regulation market and the electric energy market can be chosen either way, and energy storage power stations can flexibly choose the most advantageous trading products based on their market predictions. At present, the price ceiling of the Shandong frequency regulation market has been raised from 8 yuan/MW to 12 yuan/MW. The daily maximum electricity price difference in the electric energy market has exceeded 1 yuan/kWh, which is much higher than the peak-shaving compensation standard of 0.2 yuan/kWh in the previous year, and there is more room for arbitrage. If companies operating energy storage power stations can correctly formulate bidding strategies, their profits are expected to increase further.

Under the requirement of building energy storage for new energy stations, the planning and construction scale of energy storage power stations have been growing rapidly in the past two years, but many energy storage power stations lack cost recovery channels. The progress of spot market construction has increased the hope of energy storage profit. Although only Shandong has tried it first, many new energy companies in other spot pilot provinces have also begun to calculate the benefits of energy storage participating in the spot market. A practitioner told the author that under the spot market rules in Shanxi, energy storage has the possibility of achieving break-even during the investment period, but in Gansu, due to the limited price difference in the spot market, it is not economical for the time being.

The Guangdong market will also take action. At the end of February 2022, the Southern Energy Regulatory Bureau issued the "Notice on Strengthening the Supervision of the Development and Application of New Energy Storage in the Southern Region", proposing to support new energy storage as an independent market entity to participate in the medium- and long-term electricity market, spot market and ancillary service market. Also in February, the Taishan Nuclear Storage Complementary Electrochemical Energy Storage Power Station with a scale of 1.3GW/2.6GWh and the Huadian Pingshi Electrochemical Energy Storage Power Station with a scale of 200MW/MWh successively announced the completion of filing. These two projects are different from the most common thermal storage combined frequency regulation or user-side energy storage projects in Guangdong. There is no policy drive for mandatory supporting energy storage, which shows the optimistic expectations of power generation companies and project partners for the Guangdong market.

Recently, the National Development and Reform Commission has issued a document requiring the acceleration of the construction of the electricity spot market. In principle, the first batch of pilot areas will carry out long-term continuous trial operation of the spot market in 2022, and the second batch of pilot areas will start the spot market trial operation before the end of June 2022. Other regions must report their spot market construction plans as soon as possible.

The construction of the electricity spot market is full of challenges, but if Shandong can take the lead in independently participating in the spot market and form a stable business model, the pace of other regions absorbing independent energy storage as the main body of the spot market may accelerate, and the spot market is expected to become an important stage for energy storage to play its own value.