Abstract-This paper proposes a model to determine the optimal size of an energy storage facility from a strategic investor's perspective. This investor seeks to maximize its profit through making strategic planning, i.e., storage sizing, and strategic operational, i.e., offering and bidding, decisions. We consider the uncertainties associated with rival generators' offering strategies and future load levels in the proposed model. The strategic investment decisions include the sizes of charging device, discharging device, and energy reservoir. The proposed model is a stochastic bi-level optimization problem; the planning and operation decisions are made in the upper-level, and market clearing is modeled in the lowerlevel under different operating scenarios. To make the proposed model computationally tractable, an iterative solution technique based on Benders' decomposition is implemented. This provides a master problem and a set of subproblems for each scenario. Each subproblem is recast as an mathematical programs with equilibrium constraints. Numerical results based on real-life market data from Alberta's electricity market are provided. Price offer of energy storage system s in the discharging mode at week w at hour t under scenario r, Price bid of energy storage system s in the charging mode at week w at hour t under scenario r, ($/MWh). p dis s,w ,t,r Quantity offer of energy storage system s in the discharging mode at week w at hour t under scenario r, (MW). p ch s,w ,t,r Quantity bid of energy storage system s in the charging mode at week w at hour t under scenario r, (MW). p g,w ,t,r Power produced by generator g at week w at hour t under scenario r, (MW). market-clearing price at week w at hour t under scenario r, ($/MW·h). μ Dual variables corresponding to the lower-level constraints. See Section II for details. Note: When a symbol takes the hat sign, ∧, it is converted from a variable in one problem to a fixed parameter in another problem.
The storage size in addition to its operation is optimized in the upper level problem in REF when the lower level problem clears the market.
Strategic Sizing of Energy Storage Facilities in Electricity Markets
IEEE Transactions on Sustainable Energy
IEEE Transactions on Sustainable Energy
Engineering