Strategic investments in mobile and stationary energy storage for low-carbon power systems

Abstract

The main feature and trend of the distribution system is the integration of renewable energy with high penetration rates. The variability and zero marginal cost characteristics of renewable energy will lead to drastically fluctuating locational marginal prices. In the deregulated electricity market, merchants have incentives to utilize energy storage and price arbitrage. Mobile energy storage has a short capital payback period and is widely recognized for transferring energy in the temporal and spatial dimensions. This paper analyses the interaction between merchants and distribution system operators and presents a hybrid energy storage strategic investment framework using bi-level programming. In the upper-level problem, the merchant formulates the capacity, location, and operation strategy of different energy storage to maximize the market revenue of hybrid energy storage, which is paid for by the locational marginal price. In the lower-level problem, the distribution system operator develops an optimal dispatch strategy considering renewable energy and merchant investments. A joint energy and reserve market clearing procedure is performed to derive the locational marginal prices. In the lower-level problem, a data-driven solution strategy based on machine learning is introduced. It uses deep neural networks to approximate the mapping relationship between distribution system states and locational marginal prices. The presented methodology is implemented in an IEEE-33 node system. The results demonstrate that, compared to the basic case, the hybrid energy storage investment strategy has led to an 8.1 % increase in merchant profits and a 12.9 % reduction in the operational costs of the distribution network. The deep neural network approximator fully avoids the lower-level problem with less than 5 % optimality loss.