Sufficient supply of public welfare energy storage system

As a price maker, the community energy storage can not only earn profits through energy arbitrage but also smooth price trajectories and further influence social welfare. We formulate the problem as a finite-horizon Markov decision process that aims to maximize the energy arbitrage and social welfare of the prosumer-based community.

With the growing scale of energy storage, the welfare benefits become significant, which may stimulate different ownership, such as consumers, producers and prosumers, to focus on their own welfare, thus further influencing storage use. In particular, consumers are likely to increase consumer surplus, so they tend to overuse storage.

Background and motivation Community energy storage is one of the advanced smart grid technologies in recent years, which provides lots of benefits for the electric power system in reliability, quality, economy and control .

Case studies indicate that welfare-maximizing storage earns more benefits than profit-maximizing storage. The proposed threshold-based algorithm can guarantee optimality and largely decrease the computational complexity of standard stochastic dynamic programming.

The advance of the management scheme is that the optimal policy has a threshold structure. The structure has an analytic form that can guide the energy storage to charge/discharge by comparing its current marginal value and the expected future marginal value.

The obvious solution to intermittency is energy storage. However, its constraints and implications are far from trivial. Developing and facilitating energy storage is associated with technological difficulties as well as economic and regulatory problems that need to be addressed to spur investments and foster competition.