Undergraduate Research Showcase
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Electricity Price Models in the Context of Increasing Renewable Energy Generation
Felipe dos Santos Couto, f.couto@columbia.edu
SEAS ’22, Mechanical Engineering, Columbia University
Supervising Faculty, Sponsor, and Location of Research
Dr. Bolun Xu, Undergraduate Research Involvement Program, The Earth Institute,
Columbia University
Abstract
Renewable energy is no longer an interesting possibility for the future but rather an
urgent demand in the present to fight the climate crisis. Nevertheless, academia, industry,
and public entities still face many challenges to increase penetration of renewable sources
on the world energy mix. In this context, storing energy has risen as a key alternative and
numerous storage solutions have been developed. The purpose of this study is to better
understand how large-scale energy storage systems (ESS) impact electricity prices. We
developed interpretable machine learning models and analyzed how supply and demand
attributes correlate with price fluctuations – especially, price spikes, which are a major
sign of market inefficiency. Optimal Regression Trees and Multiple Linear Regressions
were applied to the Southwest Power Pool market data, shedding some light upon the
attributes’ sensitivities. We then utilized the sensitivities to estimate price reductions due
to energy storage. Results showed a potential reduction, on average, of 19.0% on price
spikes. Further studies shall continue to investigate the effects grid-scale ESS on prices.
By doing so, we hope to corroborate with the expansion of renewable energy generation
and ESS on the grid.
Keywords
renewable energy, energy storage, interpretable machine learning, electricity price
models
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