Energy Management of Price-Maker Community Energy Storage by Stochastic Dynamic Programming
In this paper, we propose an analytical stochastic dynamic programming (SDP) algorithm to address the optimal management problem of price-maker community energy storage. As a price-maker, energy storage smooths price differences, thus decreasing energy arbitrage value. However, this price-smoothing...
| Main Authors: | , , , , , , |
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| Format: | Article |
| Language: | English |
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China electric power research institute
2024-01-01
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| Series: | CSEE Journal of Power and Energy Systems |
| Subjects: | |
| Online Access: | https://ieeexplore.ieee.org/document/10375969/ |
| _version_ | 1797197432588599296 |
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| author | Lirong Deng Xuan Zhang Tianshu Yang Hongbin Sun Yang Fu Qinglai Guo Shmuel S. Oren |
| author_facet | Lirong Deng Xuan Zhang Tianshu Yang Hongbin Sun Yang Fu Qinglai Guo Shmuel S. Oren |
| author_sort | Lirong Deng |
| collection | DOAJ |
| description | In this paper, we propose an analytical stochastic dynamic programming (SDP) algorithm to address the optimal management problem of price-maker community energy storage. As a price-maker, energy storage smooths price differences, thus decreasing energy arbitrage value. However, this price-smoothing effect can result in significant external welfare changes by reducing consumer costs and producer revenues, which is not negligible for the community with energy storage systems. As such, we formulate community storage management as an SDP that aims to maximize both energy arbitrage and community welfare. To incorporate market interaction into the SDP format, we propose a framework that derives partial but sufficient market information to approximate impact of storage operations on market prices. Then we present an analytical SDP algorithm that does not require state discretization. Apart from computational efficiency, another advantage of the analytical algorithm is to guide energy storage to charge/discharge by directly comparing its current marginal value with expected future marginal value. Case studies indicate community-owned energy storage that maximizes both arbitrage and welfare value gains more benefits than storage that maximizes only arbitrage. The proposed algorithm ensures optimality and largely reduces the computational complexity of the standard SDP. |
| first_indexed | 2024-04-24T06:43:52Z |
| format | Article |
| id | doaj.art-fed140b073dc4a29b25eface767a59da |
| institution | Directory Open Access Journal |
| issn | 2096-0042 |
| language | English |
| last_indexed | 2024-04-24T06:43:52Z |
| publishDate | 2024-01-01 |
| publisher | China electric power research institute |
| record_format | Article |
| series | CSEE Journal of Power and Energy Systems |
| spelling | doaj.art-fed140b073dc4a29b25eface767a59da2024-04-22T20:20:24ZengChina electric power research instituteCSEE Journal of Power and Energy Systems2096-00422024-01-0110249250310.17775/CSEEJPES.2023.0272010375969Energy Management of Price-Maker Community Energy Storage by Stochastic Dynamic ProgrammingLirong Deng0Xuan Zhang1Tianshu Yang2Hongbin Sun3Yang Fu4Qinglai Guo5Shmuel S. Oren6Shanghai University of Electric Power,Department of Electrical Engineering,Shanghai,China,200000Tsinghua-Berkeley Shenzhen Institute, Tsinghua University,Shenzhen,China,518055Risk Analytics and Optimization Chair, EPFL,SwitzerlandTsinghua University,State Key Laboratory of Power Systems,Department of Electrical Engineering,Beijing,China,100084Shanghai University of Electric Power,Department of Electrical Engineering,Shanghai,China,200000Tsinghua University,State Key Laboratory of Power Systems,Department of Electrical Engineering,Beijing,China,100084Tsinghua-Berkeley Shenzhen Institute, Tsinghua University,Shenzhen,China,518055In this paper, we propose an analytical stochastic dynamic programming (SDP) algorithm to address the optimal management problem of price-maker community energy storage. As a price-maker, energy storage smooths price differences, thus decreasing energy arbitrage value. However, this price-smoothing effect can result in significant external welfare changes by reducing consumer costs and producer revenues, which is not negligible for the community with energy storage systems. As such, we formulate community storage management as an SDP that aims to maximize both energy arbitrage and community welfare. To incorporate market interaction into the SDP format, we propose a framework that derives partial but sufficient market information to approximate impact of storage operations on market prices. Then we present an analytical SDP algorithm that does not require state discretization. Apart from computational efficiency, another advantage of the analytical algorithm is to guide energy storage to charge/discharge by directly comparing its current marginal value with expected future marginal value. Case studies indicate community-owned energy storage that maximizes both arbitrage and welfare value gains more benefits than storage that maximizes only arbitrage. The proposed algorithm ensures optimality and largely reduces the computational complexity of the standard SDP.https://ieeexplore.ieee.org/document/10375969/Analytical stochastic dynamic programmingenergy managementenergy storageprice-makersocial welfare |
| spellingShingle | Lirong Deng Xuan Zhang Tianshu Yang Hongbin Sun Yang Fu Qinglai Guo Shmuel S. Oren Energy Management of Price-Maker Community Energy Storage by Stochastic Dynamic Programming CSEE Journal of Power and Energy Systems Analytical stochastic dynamic programming energy management energy storage price-maker social welfare |
| title | Energy Management of Price-Maker Community Energy Storage by Stochastic Dynamic Programming |
| title_full | Energy Management of Price-Maker Community Energy Storage by Stochastic Dynamic Programming |
| title_fullStr | Energy Management of Price-Maker Community Energy Storage by Stochastic Dynamic Programming |
| title_full_unstemmed | Energy Management of Price-Maker Community Energy Storage by Stochastic Dynamic Programming |
| title_short | Energy Management of Price-Maker Community Energy Storage by Stochastic Dynamic Programming |
| title_sort | energy management of price maker community energy storage by stochastic dynamic programming |
| topic | Analytical stochastic dynamic programming energy management energy storage price-maker social welfare |
| url | https://ieeexplore.ieee.org/document/10375969/ |
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