What is distributed energy storage?

The introduction of distributed energy storage represents a fundamental change for power networks, increasing the network control problem dimensionality and adding long time-scale dynamics associated with the storage systems’ state of charge levels.

What are the key features of a energy distribution system?

Methodology/results: We employ a stylized model that captures essential features of an energy distribution system, including convex costs, stochastic demand, storage efficiency, and line losses. Using dynamic programming, we optimize storage operations and derive value function properties that are key to analyzing the storage investment decisions.

Is centrally stored energy a better option for inventory pooling?

Operationally, centrally stored energy offers more flexibility, which is consistent with the conventional understanding of inventory pooling. However, we find that localized storage often emerges as the preferred option at the investment stage under various circumstances.

How do we analyze storage investment decisions using dynamic programming?

Using dynamic programming, we optimize storage operations and derive value function properties that are key to analyzing the storage investment decisions. We discern fundamental differences between centralization/localization decisions at the capacity investment stage and the centralization/localization decisions at the storage operations level.

Should storage investment be centralized or localized?

Subsequent storage investment should consider the tradeoffs between centralized versus localized investment. Operationally, the relative magnitudes of storage and line losses drive different optimal storage policies. Despite the differences, these policies are guided by common principles such as pooling inventory and balancing local storage levels.

Is localized storage a good investment option?

However, we find that localized storage often emerges as the preferred option at the investment stage under various circumstances. Managerial implications: Storage investment should first be made at the demand locations with positive minimum demand regardless of the level of demand variability.