A stochastic dynamic programming model for co-optimization of distributed energy storage

We develop a stochastic dynamic programming model that co-optimizes the use of energy storage for multiple applications, such as energy, capacity, and backup services, while accounting for market and system uncertainty. Using the example of a battery that has been installed in a home as a distributed storage device, we demonstrate the ability of the model to co-optimize services that 'compete' for the capacity of the battery. We also show that these multiple uses of a battery can provide substantive value.