  This paper introduces and rationalizes a new model for bidding and clearing
energy storage resources in wholesale energy markets. Charge and discharge bids
in this model depend on the storage state-of-charge (SoC). In this setting,
storage participants submit different bids for each SoC segment. The system
operator monitors the storage SoC and updates their bids accordingly in market
clearings. Combined with an optimal bidding design algorithm using dynamic
programming, our paper shows that the SoC segment market model provides more
accurate representations of the opportunity costs of energy storage compared to
existing power-based bidding models. The new model also captures the inherent
SoC-dependent operational characteristics of energy storage. We benchmark the
SoC segment market model against an existing single-segment model in
price-taker and price-influencer simulations. The simulation results show that
compared to the existing power-based bidding model, the proposed model improves
profits by 10-56% in the price-taker case study; the model also improves total
system cost reduction from storage by around 5%, and helps reduce price
volatilities in the price-influencer case study.
