Storage

Storage technologies such as batteries, pumped hydro, and coordinated consumer energy resources are modelled as flexible assets that can shift energy across time. The model reflects both their physical capabilities and economic behaviour within the NEM.

Capacity and Technology Types

Each storage unit is defined by its power capacity (MW) and duration (in hours), as well as ramp rates, round-trip efficiency, and bidding behaviour.

Energy Limits and Cycling

For each storage plant in the model, we track its state of charge over time, and constrain it to stay between zero and its maximum energy capacity. To reflect physical and commercial constraints, the model also limits the total number of charge/discharge cycles over the optimisation horizon to reflect warranties.

Operational Limits

Ramp rate limits are applied based on technology type to ensure ramping is consistent with real world behaviour. Even though BESS can ramp effectively instantaneously, we restrict the fleet ramp rate so it takes 10 minutes for the full fleet to ramp to maximum discharge. This allows us to capture the fact that, even though an individual battery can ramp fully from one settlement period to the next, this rarely happens for the whole fleet simultaneously.

Economic Behaviour

Storage dispatch is cross-optimised with the rest of the model. This means that it will dispatch in whichever way minimises total system cost, subject to it meeting its minimum cost of cycling or SRMC, whilst factoring in economic withholding of capacity.

For batteries, these SRMCs are derived from capital cost assumptions (e.g. cost per MWh of storage). Battery energy storage systems also have S-curves applied to their SRMCs to reflect diverse bidding patterns. This means that some battery capacity will take a low spread, as long as it still pays back this energy capex (capex/MWh spread across an assumed 8,000 cycle lifetime). Meanwhile, some battery capacity will be withheld to wait for a higher spread, reflecting opportunity cost. This withholding of capacity will become more important in the future as batteries start competing with each other, and setting the price more often.

A low fixed cycling cost is used for pumped hydro based on public sources. However, it also has a round trip efficiency of 75% which means that it has to discharge at 33% higher price. For example, if it wants to discharge 75 MWh then it has to charge by 100 MWh as it loses 25%, so discharge price must be at least the charge price * 100 / 75. We also withhold some pumped hydro capacity to wait for higher spreads to reflect opportunity cost.