Internalizing pumped storage hydropower losses into the electricity market

Demand for point-to-point power transfer services is expected to increase with the integration of variable renewable energy sources and the retirement of conventional thermal power generation. Storage batteries and pumped storage hydropower plants have the advantage of being able to provide power transport services with absorption of surplus power, which is not possible with conventional thermal power. One major problem is that pumped storage hydropower plants may not recover the costs necessary to compensate for the pumping losses that occur during time-to-time power transport. This problem does not occur with power transport services that transmit power from point-to-point. This paper proposes a formulation for pumped storage hydropower plants and a procedure for calculating power market prices to internalize pumping losses into the power market. The annual total revenue of pumped storage hydropower plants is compared based on the conventional marginal price by point and the market price calculated by the proposed method. The results show that the proposed method partially integrates the value of time transportation of pumped storage hydropower plants into the electricity market.