Multi-Region Optimal Energy Storage Arbitrage

The increasing interconnection of power systems through AC and DC links enables energy storage units to access multiple electricity markets, yet most existing arbitrage models remain limited to single-market participation. This gap restricts understanding of the economic value and operational constraints associated with cross-border storage operation. To address this, an optimal multi-region energy storage arbitrage model is developed for a grid-scale battery located at one end of an interconnector linking two distinct day-ahead markets. The formulation incorporates battery capacity and ramping limits, converter and interconnector losses, and market-specific buying and selling prices. Using disjunctive linearization of nonlinear terms, this work exactly reformulates the multi-region energy arbitrage optimization as a mixed-integer linear programming problem. The proposed formulation ensures that the battery either charges or discharges from all participating energy markets simultaneously at any given time. Case studies using eight years of Belgian–UK price data demonstrate that multi-region participation can increase arbitrage revenue by more than 40% compared to local energy arbitrage operation only, while also highlighting the negative impact of interconnector congestion on achievable gains. The results indicate that cross-border market access substantially enhances storage profitability while considering the cycle of battery and that the proposed formulation provides a computationally efficient framework for evaluating and operating storage assets in interconnected power systems. Finally, a pseudo-efficiency term is introduced to improve battery utilization by discarding less profitable charging and discharging battery cycles.