Potential revenue from electrical energy storage in the Electricity Reliability Council of Texas (ERCOT)

This paper outlines the calculations required to estimate the maximum potential revenue from participation in arbitrage and regulation in day-ahead markets using linear programming. Then, we use historical Electricity Reliability Council of Texas (ERCOT) data from 2011-2012 to evaluate the maximum potential revenue from a hypothetical 32 MWh, 8 MW system. We investigate the maximum potential revenue from two different scenarios: arbitrage only and arbitrage combined with regulation. Our analysis shows that, with perfect foresight, participation in the regulation market would have produced more than twice the revenue compared to arbitrage in the ERCOT market in 2011 and 2012. Three simple trading strategies that do not rely on perfect knowledge are then compared to the optimization results.