  Arbitrage is one important revenue source for energy storage in electricity
markets. However, a large amount of storage in the market will impact the
energy price and reduce potential revenues. This can lead to strategic
behaviors of profit-seeking storage investors. To study the investors'
strategic storage investments, we formulate a non-cooperative game between
competing investors. Each investor decides the storage investment over a long
investment horizon, and operates the storage for arbitrage revenues in the
daily electricity market. Different investors can deploy storage with different
characteristics. Their decisions are coupled due to the market price that is
determined by all the investors' decisions. We use market data from California
ISO to characterize the storage impact on the market price, based on which we
establish a centralized optimization problem to compute the market equilibrium.
We show that an increasing number of investors will increase the market
competition, which reduces investors' profits but increases the total invested
storage capacity. Furthermore, we find that a slight increase in the storage
efficiency (e.g., increased charge and discharge efficiency) can significantly
improve an investor's profit share in the market.
