Optimal operation strategy for distributed battery aggregator providing energy and ancillary services

Abstract

The high penetration of distributed renewable energy raises a higher concern for the safe and economic operation of the smart grid. Distributed batteries equipped in demand-side can not only contribute to the reliability and security of the grid, but also make profits by participating in the electricity market, especially when distributed batteries are combined and operated by an aggregator. Considering the well-operated mechanism of performance based regulation (PBR) in the U.S. electricity market, it becomes increasingly lucrative for batteries to participate not only in energy markets for energy arbitrage, but also in ancillary service markets to provide regulation and peak-load shaving services. In this study, distributed batteries are operated and coordinated by the aggregator, which simultaneously submits offers to the energy and the ancillary service markets as an individual entity. An optimal decision model is formulated for the aggregator to determine the operation and bidding strategy for the distributed batteries by considering the characteristics of batteries, including the terms of capacity, efficiency and degradation cost. Finally, a numerical case is conducted to evaluate the benefits of the decision model.