Merchant and regulated storage investment in energy and reserve markets: A Stackelberg game

With large-scale integration of renewable generation, energy storage is expected to play an important role in providing flexibility systems. In this paper, the authors construct a trilevel Stackelberg game model study co-investment merchant and regulated reserve markets. The upper-level problem profit-maximizing investment with desired rate-of-return solved by investor. middle-level problem, system operator (SO) makes decisions minimize cost. lower-level SO clears proposed captures interactions investment. Also, it clarifies how different ownership structures influence profitability cost capital wind penetration level scenarios. numerical results conducted on 6-bus illustrative example IEEE 24-bus Reliability test case validate model. show that both can increase social welfare, welfare remains almost same under storage.