Strategic Bidding and Battery Charge/Discharge Revenue (BCR)
Strategic bidding significantly influences Battery Charge/Discharge Revenue (BCR) for energy storage by altering price arbitrage strategies, market participation efficiency, and price manipulation risks. Key mechanisms include:
1. Price Arbitrage Optimization
Strategic bidding uses forecasts and multi-interval optimization to maximize price differentials. Storage operators bid to charge during low-price periods and discharge during high-price periods, directly boosting BCR.
- Imperfect forecasting reduces utilization for short-duration storage (<4 hours), lowering BCR.
- Long-duration storage (>12 hours) achieves >80% utilization even with naive price forecasts, stabilizing BCR.
2. Market Power and Price Manipulation
Storage operators acting as price makers can distort prices through capacity withholding or exaggerated bids, artificially widening price spreads to enhance BCR.
- Mitigation mechanisms (e.g., bid caps, supply mandates) limit such strategies but may reduce revenue if over-restrictive.
- Complex bidding structures (e.g., price-quantity pairs) enable more precise manipulation of clearing prices, increasing BCR under weak regulation.
3. Dispatch Model Selection
- Modeling state-of-charge (SoC) constraints in bids improves utilization by 5%+, as it aligns bids with actual storage capabilities.
- Single-period vs. multi-period bidding: Multi-period strategies optimize inter-temporal arbitrage, directly increasing BCR.
4. Market Design Impacts
- Renewable-rich systems increase price volatility and negative prices, raising BCR for storage operators employing strategic peak-shifting.
- Nodal vs. zonal markets: Nodal pricing allows storage to exploit localized congestion, further boosting BCR.
Key Trade-offs
| Factor | BCR Impact |
|---|---|
| Forecast accuracy | Critical for short-duration storage |
| Market rules | Mitigation reduces manipulation-driven BCR but stabilizes long-term revenues |
| Storage duration | Longer durations buffer against bidding inefficiencies |
By leveraging these dynamics, strategic bidding can substantially enhance BCR but risks market inefficiencies or regulatory penalties if overly aggressive.
Original article by NenPower, If reposted, please credit the source: https://nenpower.com/blog/how-does-strategic-bidding-affect-bcr-payments-for-energy-storage/
