Optimal bidding strategy for variable-speed pump storage in day-ahead and frequency restoration reserve markets

Variable-speed pump power storage is an innovative large-scale technology that is being deployed across the world. In addition to price arbitrage and provision of downward replacement reserve, its operational flexibility enables the provision of frequency restoration reserve (FRR) both in turbine and pump modes. This work proposes a bidding optimization strategy for the participation in the FRR market. The proposed framework encompasses a medium-term module to optimally allocate the yearly natural water inflows, representation of electrical and hydraulic losses in the water inflow/power curves, as well as forecasting techniques to predict market prices and natural water inflows. Moreover, it does not assume prior knowledge of the amount of activated FRR capacity band. An evaluation module is also proposed to replicate the real operation of the power plant and enables an accurate calculation of the revenue. A comparison between fixed and variable-speed Pump storage power (PSP) units participating in the Iberian electricity market presented an increase in revenue of almost 12%. Due to the low liquidity of the FRR market in Portugal, and the considerable capacity of the PSP unit, under some specific situations, it might be necessary to cap the size of the FRR bid to decrease the difference between the expected and realized revenue.