A Study on Energy Storage Participation Methods and Coordinated Clearing Models for Electricity Energy and Frequency Regulation in Spot Markets

Currently, China is in the transitional phase of spot market development, where the “quote for quantity without price” on the demand side and sequential clearing of energy and frequency regulation ancillary service markets result in “structural” losses for energy storage participation and low market efficiency. To address these issues, this study compares and summarizes energy storage participation modes in China's single-sided spot market, focusing on analyzing the “structural “losses caused by the” quantity and price offering “approach. Three key loss risks are identified: price suppression by energy storage, forced charging/discharging to reduce unit commitment costs, and fixed price spreads failing to reflect dynamic energy loss costs under fluctuating spot prices. A novel quotation method is designed based on the price spread-based revenue principle to align energy storage revenue with its systemic contributions. Additionally, a sequential clearing model considering opportunity costs is proposed to mitigate the shortcomings of traditional sequential models in coordinating energy and frequency regulation resources. Case studies demonstrate that the proposed mechanism effectively reflects energy storage's operational preferences, enhances its profitability and market efficiency, and approaches the Pareto optimal state of joint clearing.