Empirical Study on the ESS’s Impact on Electricity Cost and Volatility Reduction : A Steel Manufacturing Firm Case in Korea

Energy‑intensive industries such as steel manufacturing have faced severe challenges in managing the electricity costs at the time of higher price volatility. While market price volatility intensifies, there is a lack of empirical research quantifying the exact economic impact to the company made by Energy Storage Systems (ESS) using specific industrial load profiles. This study addresses this gap by simulating electricity cost reduction and volatility mitigation for a 50 MW peak load scale virtual steel plant, based on scaled 2018 load data from DAEWOO Steel company and 2022–2024 Korea SMP data. We compare four scenarios: Pure SMP exposure, Fixed and Collar PPA, ESS Arbitrage, and a Hybrid Portfolio of PPA and ESS. Results show that Scenario 3 (ESS Arbitrage) consistently achieved annual cost savings of 7% to 12% compared to a market-based Scenario, providing more stable protection against reverse hedging or lesser hedging risks inherent in PPA contracts. Furthermore, the paper suggests that when ESS combines with deep understanding of load patterns on the own company, ESS serves as a great hedging tool by moderate arbitrage and exact peak shaving. This research offers practical insights for energy-intensive companies seeking to optimize electricity price under uncertainty of the electricity market.