Optimal energy storage planning for stacked benefits in power distribution network

Energy storage system (ESS) is regarded as an effective tool to promote energy utilization efficiency and deal with the operational risk of the power distribution network (PDN), which is caused by the inherent uncertainties of distributed energy resources and the surging of new loads from emerging energy sectors. Multiple benefits could be accrued by ESSs when providing various services to the PDN. However, investing in ESSs without a comprehensive cost-benefit analysis will underestimate the ESSs’ profitability and result in a suboptimal planning scheme. To this end, this paper proposes a bi-level ESS planning method considering the stacked benefits of ESSs. First, to facilitate the comprehensive cost-benefit analysis in the investment decision making process, systematic definitions and quantitative methods of ESS benefits are proposed to evaluate both the investment and operational benefits of ESSs properly. Novel ESS reserve model and load hosting capacity evaluation model are also developed to improve the accuracy of the benefit assessment. Second, a game theory based bi-level programming method is proposed to precisely capture the two-layer dynamic interaction structure of ESS planning using an easy-to-implement mathematical optimization-based formulation with global optimum guarantee. Specifically, the upper level optimizes the sites and sizes of ESSs for maximizing the stacked benefits, while the lower level economic dispatch model determines the optimal scheduling of the installed ESSs. Finally, to make the bi-level ESS planning problem tractable, it is reformulated as a single-level mathematical programming with equilibrium constraints by the duality-based reformulation. The linearization method is applied to further convert it into a mixed-integer programming problem that could be directly solved by commercial solvers. Numerical results verify that the proposed planning strategy could yield cost-effective results under different settings. Comprehensive cost-benefit analysis also indicates that transmission and distribution system upgrade deferral, reserve/regulation provision and energy arbitrage are the top-three applications for maximizing ESS benefits, and it is not always reasonable to keep investing in ESSs as their marginal benefits will decrease to zero with the increasing ESS investment.