Compensation mechanism for peak-shaving auxiliary services considering the cost recovery period of energy storage

Abstract

[EN] China's dual carbon targets¿peaking emissions by 2030 and achieving carbon neutrality by 2060¿require effective integration of renewable energy, creating enhanced peak-shaving auxiliary services. As thermal power plants (TP) shift to auxiliary roles, their profitability diminishes, while energy storage systems (ESS) offer flexibility and rapid response to stabilize supply-demand imbalances. However, ESS adoption has been hindered by weak cost recovery mechanisms. This study introduces a novel economic dispatch model for a wind-fire-storage system, evaluating ESS's income, costs, and cost recovery periods under different compensation mechanisms. The results show that the proposed compensation mechanism reduces ESS cost recovery periods by 15.4 %, boosts wind power profitability, stabilizes TP output, and lowers peak-shaving costs. The findings emphasize the importance of strategic compensation mechanisms in facilitating renewable energy integration, reducing reliance on thermal power, and enhancing ESS participation. This work provides a practical framework for optimizing energy storage applications and supporting China's carbon neutrality goals.