Abstract

Abstract: Storage of electrical energy can be viewed as shifting energy through time. To assess the economic value of such storage, we may assume that energy is always available at a price which is time-dependent, so that the value becomes that of being able to shift energy from times when it is cheap to times when it is (otherwise) expensive. We consider the mathematics of optimal control under conditions in which there are both capacity and rate constraints on storage, and under conditions where this activity may be sufficiently large in scale as to itself impact on market prices. In particular we show that time horizons for optimal decision making are typically short – of the order of a day.

We discuss also possible extensions to cases where future prices are uncertain, and to time-shifting of demand.