Numeric Study of the Interaction of Energy and Capacity Markets for Renewable Investment with Energy Storage Integration

This paper explores the integration of renewable energy (RE) and energy storage (ES) within the framework of capacity and energy markets through a detailed numerical analysis employing a bi-layer market model. The impact on market dynamics and investment decisions is assessed by simulating various scenarios that encompass differing ES costs and levels of RE investment. The bi-layer model, which consists of an energy market clearing model and a capacity market clearing model allows for an in-depth examination of the interactions between different market mechanisms and their influence on the viability and sustainability of energy systems. The findings reveal that strategic ES integration and diverse RE investments significantly enhance market efficiency and stability, suggesting a need for market designs that accommodate the growing prevalence of RE resources. This study provides valuable insights into optimizing market structures to better harness the potential of RE and ES solutions, promoting economic and environmental sustainability in power systems.