A comprehensive review of the impacts of energy storage on power markets

Abstract

Energy storage technologies have been recognized as an important component of future power systems due to their capacity for enhancing the electricity grid's flexibility, reliability, and efficiency. They are accepted as a key answer to numerous challenges facing power markets, including decarbonization, price volatility, and supply security. As the utilization of energy storage investments expands, their influence on power markets becomes increasingly noteworthy. This review aims to summarize the current literature on the effects of energy storage on power markets, focusing on investment decisions, market strategy, market price, market model, and supply security. This manuscript illustrates that energy storage can promote renewable energy investments, reduce the risk of price surges in electricity markets, and enhance the security of electricity supply and flexibility of the power system. However, there are also challenges and risks associated with the implementation of energy storage solutions, such as the need for appropriate market design, regulatory frameworks, and incentives to encourage investment. Overall, the review highlights the importance of further research in developing effective policies and market mechanisms that can effectively capitalize on the inherent advantages offered by energy storage for power markets. We conclude with a discussion of future research directions in this field, including the potential for simulation models to improve our comprehension of the complex relations between energy storage and the power market.