A Game-Theoretical Analysis of Retired Electric Vehicle Batteries in Energy Storage Markets

This study adopts a game-theoretical approach to examine the impact of introducing retired electrical battery-based (REVB-based) energy storage systems on the energy storage market and the electrical grid. A bi-level Nash-Stackelberg game is formulated with three players: power stations (PSs), energy storage aggregators (ESAs), and energy storage service operators (ESSOs). In this framework, power stations participate in the day-ahead market and develop bidding strategies for electricity supply. Energy storage service operators, equipped with either standard storage systems or REVB-based systems, determine optimal bidding strategies for charging and discharging power. These strategies aim to provide load-shaving during peak-load periods and enhance the integration of solar power during base-load periods. The standard and REVB-based energy storage systems differ in their maximum charging-discharging cycles, investment and maintenance costs. The ESA acts as an intermediary between the day-ahead market and the energy storage market, aggregating the charging and discharging power from ESSOs. Specifically, during peak-load periods, the ESA arbitrages between the two markets by selling stored discharging power purchased from ESSOs to the day-ahead market. Conversely, during base-load periods, the ESA purchases charging power from the day-ahead market to charge energy storage systems and purchases charging capacity from ESSOs to facilitate the accommodation of renewable energy. The ESA is regarded as the leader in the Stackelberg-Nash game, with PSs and ESSOs acting as the followers. Additionally, incentive compensation is considered to address potential profit losses incurred by the ESA during baseload periods. Numerical simulations are conducted to explore how the introduction of REVB-based energy storage systems influences profits and system performance within the energy storage and day-ahead markets.