  With the increased penetration of Distributed Energy Resources and Renewable
Energy Systems (RES), the conventional distribution grid is advancing towards a
transactive framework supervised by a distribution system operator (DSO).
However, the inherent uncertainty of RES poses a challenge in meeting the power
demand of critical infrastructures in the microgrid unless sufficient battery
energy storage is maintained. Yet, maintaining expensive battery storage
increases the operating cost of the DSO. In this article, we propose a dynamic
resource allocation strategy to optimize the battery reserve requirement while
ensuring the critical demand is met with a provable guarantee. Our solution is
built upon stochastic control techniques where we model the uncertain nature of
RES with geometric Brownian motion. Our proposed scheme enables the DSO to
optimize the RES and battery reserve allocation to eliminate the risk of over
or underproduction. We apply the proposed scheme to derive battery reserve
allocation strategy for conventional and transactive grid settings. Finally, we
present numerical simulations under three different scenarios of multiple
microgrids with uncertain renewable generation with detailed comparison of the
performance of the proposed algorithm for conventional and transactive grid.
The simulation results demonstrate the efficacy of the proposed transactive
stochastic control algorithm.
