An important function of aggregators is to enable the participation of small energy storage units in electricity markets. This paper studies two generally overlooked aspects related to aggregators of energy storage: i) the relationship between the aggregator and its constituent storage units and ii) the aggregator's effect on system welfare.Regarding i), we show that short-term outcomes can be Pareto-inefficient: all players could be better-off. In practice, however, aggregators and storage units are likely to engage in long rather than short-term relationships. Using Nash Bargaining Theory, we show that aggregators and storage units are likely to cooperate in the long-term. A rigorous understanding of the aggregator-storage unit relationship is fundamental to model the aggregator's participation in the market. Regarding ii), we first show that a profit-seeking energy storage aggregator is always beneficial to the system when compared to a system without storage, regardless of size or market power the aggregator may have. However, due to market power, a monopolist aggregator may act in a socially suboptimal manner. We propose a pricing scheme designed to mitigate market power abuse by the aggregator. This pricing scheme has several important characteristics:its formulation requires no private information, it incentivizes a rational aggregator to behave in a socially optimal manner, and allows for regulation of the aggregator's profit. Index TermsEnergy storage, aggregators, market power, bargaining. I. INTRODUCTIONT HE adoption of household-level energy storage systems is expected to increase rapidly in the coming years (residential energy storage grew by 405% in 2015) and become a significant share of the total U.S. energy storage deployment [1]. These storage units (SUs) have the potential of selling services to the power grid [2] but may not be able to directly do so for two main reasons: i) their individual capacities are smaller than the required minimum [3], [4]; and ii) the large number of SUs would make their management difficult even if they are allowed to participate [5]. Therefore, aggregators act as mediators between SUs and the power system [6]. A number of studies regarding the operation and market strategies of aggregators have been conducted. For instance, the authors of [5], [7] study the aggregation of a fleet of electric vehicles while [8] studies the coordination The authors are with the Department of Electrical Engineering at the University of Washington. Emails: {jcontrer, maov, zhangbao}@uw.edu.

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Distributed energy resources (DERs) can serve as non-wire alternatives (NWAs) to capacity expansion by managing peak load to avoid or delay traditional expansion projects. However, the value stream derived from using DERs as NWAs is usually not explicitly included in DER planning problems. In this paper, we study a planning problem that co-optimizes investment and operation of DERs and the timing of capacity expansion. By including the timing of capacity expansion as a decision variable, we naturally incorporate NWA value stream of DERs into the planning problem. Furthermore, we show that even though the resulting optimization problem could have millions of variables and is non-convex, an optimal solution can be found by solving a series of smaller linear problems. Finally, we present a NWAs planning problem using real data from the Seattle Campus of the University of Washington.

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