Risk-Based Virtual Energy Storage System Service Strategy for Prosumers

The high cost of an energy storage system (ESS) is a barrier to its use. This paper proposes a risk-based virtual ESS (VESS) service strategy for prosumers. The basic concept of the VESS service is to logically refer to a physical ESS by multiple users. The VESS service can install ESS with a larger capacity compared to the case of installing ESS individually. Therefore, the VESS reduces the cost barrier through economies of scale. Moreover, ESS is not always being utilized at its maximum in the VESS service. Considering the risk, a VESS can offer a greater capacity than an installed ESS capacity. In this paper, the VESS service model suggested considers not only the economic benefit of increasing the VESS installation capacity but also the value at risk arising from servicing a greater capacity. The VESS service problem is formulated as a convex problem according to the VESS installation capacity and service price by applying stochastic approximation and is optimally solved using the gradient descent method in an iterative manner. The simulation results demonstrate that, when the proposed service strategy is used, the service provider that considers the risk achieves a significantly greater economic benefit of around 30% for the 128-prosumer pair case as compared to the one that does not consider risk. The benefit of the prosumer is increased by approximately 3.5% for the 128-prosumer pair case because the mismatched quantity is reduced during the peer-to-peer energy transaction. In addition, it is discussed how the proposed VESS service strategy achieves benefit through unit ESS cost reduction by the economics of scale and achieves increased service capacity with the multi-user diversity gain of participants.

Automated summary

This paper presents a risk-based virtual ESS (VESS) service strategy, which reduces the cost barrier of using an energy storage system by installing a larger capacity ESS through logically referring to a physical ESS by multiple users. The VESS service considers both economic benefits and risk values, and optimally solves the problem using the gradient descent method in an iterative manner.