A Novel Operating Strategy for Customer-Side Energy Storages in Presence of Dynamic Electricity Prices

Abstract

In the wholesale energy market, electricity prices are determined by the balance between supply and demand. Normally, customers are not exposed to these variations but pay a constant electricity price. In an attempt to reduce demand peaks, several utilities are moving from a conventional fixed-rate pricing scheme to a new market-based model, based on time-of-use or real-time pricing, able to closely reflect the wholesale energy price. Electricity customers can thus take profit from the installation of storage systems, shifting their energy consumption from on-peak to off-peak periods. This paper presents a novel charging strategy to manage customer storage systems in presence of hourly electricity prices. The optimal operating schedule of the storage device is obtained by maximizing an objective function which corresponds to the maximum benefit for the storage owner. The proposed method is developed under the assumption that the operating scheduling of the battery energy storage system (BESS) does not depend on the specific facility’s consumption. The model can be applied to several kinds of storages although the simulations refer to a lead-acid battery. Test results show that the proposed operation strategy is effective to maximize the profit for the customer. The results also show that the investment can be recovered after several years when a lead-acid battery is used, but the situation will change in the near future, thanks to the cost reduction of storage technologies expected in coming years.