Integrating distributed energy resources

Abstract

The rapid growth of the behind-the-meter (BTM) distributed generation has led to initiatives to reform the net energy metering (NEM) policies to address pressing concerns of rising electricity bills, fairness of cost allocation, and the long-term growth of distributed energy resources. This article presents an analytical framework for the optimal prosumer consumption decision using an inclusive NEM X tariff model that covers existing and proposed NEM tariff designs. The structure of the optimal consumption policy lends itself to near closed-form optimal solutions suitable for practical energy management systems that are responsive to stochastic BTM generation and dynamic pricing. The short and long-run performance of NEM and feed-in tariffs (FiT) are considered under a sequential rate-setting decision process. Also presented are numerical results that characterize social welfare distributions, cross-subsidies, and long-run solar adoption performance for selected NEM and FiT policy designs.

On Net Energy Metering X: Optimal Prosumer Decisions, Social Welfare, and Cross-Subsidies

“…The storage salvage value rate was chosen so that γ ∈ [ 1 τ max{(π − t )}, ρ min{(π + t )}]. The simulation results compared the welfare, pricing, and operation of a community under D-NEM to a community under the payment rule in [8], and to optimal standalone customers, who schedule based on [29] when they have storage and [23] when they do not 15 . In addition to comparing the market mechanisms, we evaluated the communities' performance with and without the BESS.…”

“…We assume π − ≤ π + . In practice, (3) is referred to as NEM 1.0 if π − = π + , and NEM 2.0 and beyond if π − < π + [25]. The rates π + and π − can be temporally fixed (flat rates) or varying (ToU rates).…”

“…where the second term on the right-hand side is the reward (cost) of charging (discharging) the storage share, both incurred at the salvage value rate γ ∈ R + . We assume γ ∈ [ 1 τ max{(π − t )}, ρ min{(π + t )}] to avoid trivial storage scheduling [29]. Similar to (20), the reward of a standalone household (benchmark) is, for every i ∈ N ,…”

“…D-NEM can be generalized to the case when the community has a centrally operated BESS. Although (23) remains hard to solve, it has been shown in [29] that having nonbinding storage SoC constraints (23e) is a sufficient condition for a co-optimization policy that does not require a look-ahead of available renewables in the future to achieve the maximum welfare in (23). This sufficient condition is achieved if (i) E > 2T τ b N , and (ii)…”

“…2) Optimal BESS Operation: The output of the centrally operated BESS is allocated to members through the shares ζ i 's. Theorem 1 in [29] shows that the optimal storage operation is a threshold policy based on g N t . In particular, for every t = 0, .…”