CentralizedEnergyStorageSystem

The Impact of Centralized Energy Storage on Consumer Electricity Costs and Savings

Centralized coordination of EES allows consumers to reduce annual electricity costs through arbitrage. These savings decline with the ratio of variable renewable energy capacity to flexible supply capacity in the electricity system.

For different technology mixes, the evolution of the energy system, the scheduling coordination regime and ToU tariffs all have significant impacts on private electricity bill savings.

How? It? Works

The study focuses on the impact of energy storage aggregation on consumer electricity costs and savings, with different aggregation strategies and technology mixes investigated. The results show that uncoordinated operation of EES by multiple owners for their own private benefits (a) induces lower annual electricity savings than centralized coordination (b). This is mainly due to consumers balancing their demand profile and exploiting arbitrage opportunities independently from the system operator, and the ability of storage to reduce wholesale peak prices through arbitrage.

A new centralized local energy storage topology based on MMC is proposed, and its control system and operation mechanism are introduced in this paper. A simulation model is developed in the Matlab/Simulink environment, and comparative simulation verification is carried out.

The study also analyzes the impact of centralized coordination of home batteries on electricity prices, as well as its impact on the value of PV-battery ownership. Under ToU tariffs, the study reveals that the benefits of centralized storage coordination decline quasi-exponentially as the number of aggregated home batteries Centralized Energy Storage System increases. This is mainly due to the reduction of the marginal electricity cost savings from energy storage, and lessens the incentives for consumers without onsite energy technologies to join the aggregation scheme. However, consumers without storage benefit from the impact of centralized coordination on power prices, as peak electricity prices decline for all consumers.

Why? It? Is? Important

The centralized energy storage system is a new way to provide services for residential consumers/prosumers. Compared to traditional DESS, this new model allows prosumers to avoid the investment costs and participate in the local energy market without having their own storage at home. Instead, they subscribe to the service provided by the community energy storage operator (CESO) and thereby benefit from the capacity of the centralized energy storage system.

This study investigates the impact of energy storage aggregation on consumers’ electricity bills, and the trade-off between private and system benefits of this aggregation. Savings to the consumer are found to depend on both the evolution of the electricity system and scheduling coordination of demand-side storage. The results indicate that centralized scheduling of EES offers about 10% higher savings to consumers than distributed coordination under the same scenario. Centralized scheduling is more advantageous than distributed coordination in the scenarios Gone Green and Slow Progression, respectively, due to the higher variable renewable generation capacity and the lower flexibility of gas power plants in the latter scenario.

The findings suggest that it is necessary to improve consumers’ understanding of the economic value of their own storage technology and its potential role in supporting their preferred future energy pathways. This could be achieved by providing them with detailed information about the existing storage capacity in the energy system and the fraction of this that is centrally coordinated, as well as by using high-resolution models to quantify the impacts of future electricity system evolutions on private and aggregated savings from energy storage.

How? It? Can? Save? Money

Energy storage can be used in a wide range of applications from large utility-scale projects to help manage peak energy demand and stabilize the Centralized Energy Storage System grid, to small systems sited at homes and commercial facilities for managing electricity costs and providing backup power. A key attribute of EES is its scalability, from large scale projects to smaller system sited in the home or at businesses that can be controlled via a software interface, called a smart energy manager (SEM).

Residential solar PV-battery is one of the fastest growing forms of EES, with annual installations projected to reach 7,000 megawatts by 2025—the equivalent of more than eight average-sized natural gas power plants. The flexibility of these systems can offer significant economic benefits to consumers through their ability to participate in wholesale electricity markets and provide balancing services to the system.

Depending on market structures, centralized coordination of consumer storage offers more value than distributed operation of home batteries. This is because the impact of storage on electricity prices declines when consumers proactively balance their load through aggregation. In fact, the value of home batteries to prosumers drops by 20% if their storage is aggregated.

Our analysis reveals that system-optimal operation of EES can reduce electricity prices by 4-7%. This result is explained by the inverse relationship between savings and level of flexible capacity, with domestic users requiring the largest payments since their spiky loads are more suited to system-level balancing than industrial or commercial loads.

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