Coordinated Price-Maker Operation of Large Energy Storage Units in Nodal Energy Markets

In this paper, a new optimization framework is proposed to coordinate the operation of large, price-maker, and geographically dispersed energy storage/battery systems in a nodal transmission-constrained energy market. The energy storage units are assumed to be investor-owned and independently-operated, seeking to maximize their total profit. Various design factors are taken into consideration such as the location, size, efficiency, and charge and discharge rates of the energy storage units as well as the joint impact of the energy storage operations on the locational marginal prices. While the formulated optimization problem is originally nonlinear and hard to solve, nonlinearities are tackled both in the objective function and in the constraints and the problem is transformed into a tractable mixed-integer linear program, for which the global optimal solutions are found for the charge and discharge schedules of each energy storage unit. Both deterministic and stochastic design scenarios are addressed. Various case studies are presented. It is observed that transmission line congestion is often, but not always, desirable for the coordinated storage systems. Locational diversity, practice of arbitrage, robust design, self-scheduling versus economic bidding, and the overall power system performance are also investigated.