Optimal Siting, Sizing and Bid Scheduling of a Price-Maker Battery on a Nodal Wholesale Market

The market for battery storage is set to boom in the coming years. This trend may be explained by a combination of factors ranging from a falling cost of batteries to a growing need to address uncertain and unflexible renewable energy generation. It is well known that capital costs remain too high for a large-scale lithium-ion battery storage to be profitable solely by arbitrating a wholesale market. However, we show that by carefully selecting a battery's siting and size with respect to its influence on prices and congestion, a battery storage can still be profitable on a nodal wholesale market. To that end, we develop a price-maker mixed-integer optimization framework that maximizes a depreciated battery storage revenue and yields the optimal siting and size of that battery storage. Furthermore, it can be used to optimize the bidding schedule of a battery storage in a nodal transmission-constrained wholesale market. We conducted multiple simulations to illustrate and confirm the need for this approach. Namely, we compared price-maker and price-taker results on available data from the New Zealand nodal wholesale market.