Battery energy storage revenues with empiricallyderived operating reserve market offers

We incorporate empirical offer data from the Electric Reliability Council of Texas operating reserve market into a production cost model and assess the impacts to modeled hourly prices for regulation-up and responsive reserve service. We find that naive modeling assumptions, where units offer capacity into operating reserve markets with zero-price, underestimate the resultant market clearing prices of these services. This in turn leads to a systematic undervaluation of energy storage resources, which typically generate a significant portion of their revenues from operating reserves. Specifically, in a reference 2022 portfolio, utilizing empirically-derived offers for all resources increases total energy storage revenues by 61% relative to a reference zero-price offer scenario. We also assess three energy storage penetration levels and demonstrate that storage revenues decrease substantially as deployment increases. We conclude that technoeconomic evaluations of energy storage should align their model assumptions with realistic operating reserve market offer behavior.