Clean power sources aren’t constant, and constant sources aren’t always clean. For example, in the U.S., wind energy farms tend to produce more energy at night, when wind is strongest, than during the day, when consumer demand for electricity is highest. To help bridge that gap, a few wind farms have added batteries to store excess energy for when demand peaks.
But managing such systems can be very challenging, according to new research from the Tepper School of Business. “Managing Wind-Based Electricity Generation in the Presence of Storage and Transmission Capacity,” recently published in Production and Operations Management, was co-authored by Helen Zhou (Ph.D. 2012); Alan Scheller-Wolf, Richard M. Cyert Professor of Operations Management, Senior Associate Dean of Faculty and Research; Nicola Secomandi, Professor of Operations Management, Head of the Ph.D. Program; and Stephen Smith from CMU’s Robotics Institute.
If electricity prices are always positive, the optimal operating policy is fairly straightforward, notes Scheller-Wolf, factoring in price, wind speed, and the amount of energy stored. However, for some traditional electricity producers — notably coal and nuclear power plants — adjusting output can be expensive. Thus, they may keep generating and selling power in excess of demand, driving prices into negative territory.
These negative prices can lead to significant effects at wind farms with storage: When prices are negative, wind farms can get paid to store potentially dirty power from other generators and sell it when demand is high, but in doing so, they may use up storage space intended for their own clean power and potentially displace the very clean energy they were built to provide.
The paper offers a model for negative energy prices that optimizes how wind farms manage their electricity storage. An adaptation of the optimal policy for the case when electricity prices are always positive works remarkably well also when they can be negative, says Secomandi. ―