Financial Storage Rights for Integration of Battery Energy Storage Systems Using AC-OPF

As renewable energy is gaining an increasing attention due to global warming, traditional grids are facing a radical change and a modernization process. A combination of different technologies is essential to ensure energy security and equity, while maintaining a valuable level of environmental sustainability. Energy storage devices will play a key role at different levels of the electrical grids for maintaining a stable supply of energy, both in a short- and long-term context. As storage can provide a wide variety of services to the grid, an accurate regulatory framework is necessary for a detailed consideration of its benefits. In this thesis, after introducing the basics of mathematical optimization and power system analysis, a discussion on the role and consideration of storage devices in electrical grids is presented. After defining an optimal power flow model in which storage is integrated as a "transmission asset", financial instruments called "Financial Storage Rights" are reviewed considering a nodal pricing scheme. Since papers and reports concerning this topic have been considering Direct Current approximations of the optimal power flow equations, a full formulation is presented without neglecting losses, reactive power flows and voltage levels. Consequently, the mathematical computation of Financial Transmission Rights and Financial Storage Rights is performed using the same procedures as in the approximated model presented by Taylor [1]. The simulations have been carried out using the General Algebraic Modeling System (GAMS) software, in order to evaluate how approximations affect results quality, and to provide an overview on the potential use of Financial Storage Rights in electricity markets. Lastly, the final sections define the potential future work and conclude the thesis.