## 1 Introduction  
Penetration of solar PV power production is increasing rapidly. In recent years, the annual growth rate has been approximately 40%. At the end of 2016, global installed production capacity was over 300 GW--an increase of over 70 GW of new solar PV compared to 2015 [1]. Subsidizes have made it possible for solar PV to be a profitable investment and this has been the driving force behind the rapid increase in the past years. Europe was the first region to implement subsidizes on a large scale. Lately, renewable energy sources such as solar and wind power are widely subsidized all around the world. Typical forms of subsidies are feed-in tariffs that guarantee a certain price for the energy fed to the electric grid. As prices of solar PV systems have come down, subsidies have also decreased. Soon they will no longer be offered or needed, and renewable energy sources will compete directly with traditional power generation and meet all the market necessities. PV generator output power depends mainly on the irradiance to the cells and partly on their temperature. There is no natural inertia in a PV generator, so irradiance changes could step down (or up) the power from 100 to 20% of the nominal power in tens of seconds several times in a day, on average [2]. Fast irradiance changes are primarily caused by moving clouds, and various models have been developed to predict PV generator output power and other quantities as a function of irradiance and PV generator land area. Geographical distribution of solar PV plants smooth out the power fluctuations to some extent but some form of compensation is still needed to mitigate the possible grid instability problems [3]. The electricity market works on the supply-demand principle, i.e., bids and offers form the price. Buyers are required to consume and sellers to generate the purchased and sold energy, respectively, during the imbalance settlement period (ISP). Typically, this period is one hour but, for example, in the European Parliament, it has been proposed that the imbalance settlement period should be changed to 15 min in all European Union (EU) control areas [4]. A traditional electric grid consists of base power plants and load following power plants. When power plants that rely on intermittent energy sources, such as solar and wind, are connected to the grid, more and more peaking power plants are needed, since load and generation must always be in equilibrium. Load following power plants ensure the balance between load and generation by reacting to frequency changes in the grid within minutes. Traditional base power plants, e.g., nuclear and coal, typically operate in constant power mode, and they have no strict rules on how to feed energy to the grid. However, this will not be the case when the share of renewables increases in the energy mix. Some transmission system operators have already given requirements regarding ramp-rate limits [5; 6]. It can be foreseen that the system operators will give even stricter rules for the operation of electricity producers in the grid in the future transmission. The basic function of a grid connected energy storage system (ESS) is time-shifting of load and generation. In addition to bulk energy applications, this simple feature makes it possible to use them in many ways, such as ancillary services in general, customer energy management and integrating renewable energy sources into an electric grid [7]. Feasibility of these applications can be evaluated economically. ESSs can be used as an alternative to other investments. In some cases, consumers can take advantage of electricity price fluctuations and reduce the overall costs by using energy storages for load shifting [8]. Energy storage systems can be divided into different groups based on their operation principle. Pumped hydro storages (PHS), compressed air energy storages (CAES) and flywheels can be classified as mechanical, super capacitors and magnetic energy storages as electrical and batteries and flow batteries as electrochemical energy storages.