Cloud Electricity Storage for Multi-Service Battery Operation: Case of RTE

Problem definition: We study a Cloud Electricity Storage Operator who provides shared storage service for electricity end-users using the residual part of a multi-service grid-scale battery primarily used for high priority grid services. Particularly we design optimal product offering, pricing and customer portfolio. Academic/practical relevance: A framework and solution approach for assessing and operating such multi-service battery operations with stochastic services and different priority levels is an open problem (Parker et al. 2019). Methodology: We model the problem as a two-stage stochastic optimization between high priority stochastic grid services and low priority Cloud Storage for stochastic end users. We also propose operational metrics of multiplexing gain and probability of blocking to assess the operation of multi-service multi-user battery. To address the computational challenge of solving the stochastic optimization with a large number of end-users, we propose effective capacity as a convex approximation that allows an analytical solution. We then provide an empirical analysis based on real grid congestion data from RTE and a large dataset of end-users’ electricity consumption in California and use unsupervised machine learning for estimating the consumption distributions. Results: Our empirical analysis shows i) our proposed effective capacity is a close approximation, ii) battery operation and profit are sensitive to the cost of external resources, number of end-users, and RTE’s leasing price of the battery, and iii) with only a slight discount of the leasing price (~1%), the profit of the third party from a stochastic residual battery can be the same as that of a deterministic one. Managerial implications: Cloud Electricity Storage as a low priority service is suitable for multi-service with other battery services to make integration of more storage in the grid economic, allowing larger intermittent renewables which in turn leads to reduced carbon emission. Cloud electricity storage is a profitable business model with two vital factors, heterogeneity of end-users and cost of external resources for covering blocking incidents.