Sharing unused storage in local energy markets utilizing physical storage rights: A non-cooperative game theoretic approach

Abstract

This paper proposes a local market framework to allocate physical storage rights (PSRs). As a market product, PSRs are provided by the storage owners and enable the local market participants (including arbitrageurs, renewable producers, consumers and prosumers) to access the storage. That is, they can book storage in the form of PSRs and dispatch it at a given time aiming to maximize their utility function. Storage owners can monetize their unused capacity in the form of PSRs, while the rest of the remaining market participants aiming at additional flexibility, compete to obtain the PSRs on a short-term basis. To design a functional mechanism capable of handling the periodical PSR auctions efficiently, two different business options have been investigated: (i) market participants offer part of their unused storage, keeping however the priority on utilizing their resource, and (ii) storage is exclusively granted by an external supplier that makes profit by selling storage services solely in the form of PSRs. Considering the context above, we propose two distinct local market-clearing mechanisms, consisting of two equilibrium and two optimization models. We prove that the equilibrium models can be substituted with the equivalent optimization ones ensuring the same desirable market properties, such as efficiency and revenue adequacy. Numerical results from case studies show that storage presence in the energy community decreases the total system cost up to almost 10%, demonstrating at the same time the benefits of the proposed PSR allocation mechanism for the individual market participants. That is, the individual revenue is increased up to 39%, depending on the market participant.