The value of arbitrage for energy storage: evidence from European electricity markets

Zafeirakis, Dimitrios, Chalvatzis, Konstantinos ORCID: https://orcid.org/0000-0001-9829-7030, Baiocchi, Giovanni and Daskalakis, Georgios ORCID: https://orcid.org/0000-0003-4421-7167 (2016) The value of arbitrage for energy storage: evidence from European electricity markets. Applied Energy, 184. 971–986. ISSN 0306-2619

Microsoft Word (Manuscript) - Accepted Version Available under License Creative Commons Attribution Non-commercial No Derivatives. Download (1MB)

Abstract

We use a portfolio of energy trade strategies to determine the value of arbitrage for pumped hydro and compressed air energy storage across European markets. Our results demonstrate that arbitrage opportunities exist in less integrated markets, characterised by significant reliance on energy imports and lower level of market competitiveness. We show that, among all strategies tested, arbitrage value maximizes for the weekly back to back energy trade strategy. Moreover we estimate the optimum size of energy storage systems in terms of arbitrage value for each different electricity market and evaluate the potential of arbitrage to support investment in the sector. Finally, it is argued that energy storage can take over multiple roles as a necessary positioning to facilitate financial profitability.

Item Type:	Article
Uncontrolled Keywords:	pumped hydro storage,compressed air energy storage,energy trade ,production cost,wholesale market,spot price
Faculty \ School:	Faculty of Social Sciences > Norwich Business School University of East Anglia Research Groups/Centres > Theme - ClimateUEA
UEA Research Groups:	Faculty of Social Sciences > Research Groups > Finance Group
Depositing User:	Pure Connector
Date Deposited:	20 May 2016 11:00
Last Modified:	21 Oct 2022 05:31
URI:	https://ueaeprints.uea.ac.uk/id/eprint/58915
DOI:	10.1016/j.apenergy.2016.05.047

Downloads

Actions (login required)

View Item