Participation of an Energy Storage Aggregator in Electricity Markets

Abstract

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.

Modelling of Distributed Resource Aggregation for the Provision of Ancillary Services

“…The provision of the ASs caused deviation from the reference operation points of aggregated resources, hence, the values of the objective function for all scenarios were lower compared to the reference case. The difference between the obtained value of the objective function (for Scenarios [1][2][3][4][5][6] and reference value should be treated as the minimum price of the offer for AS provision (Figure 11). The lowest profits were obtained in Scenarios 2, 4 and 6 in which RES curtailment was allowed, and a significant decrease in incomes due to lost generation occurred.…”

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