Joint investment of community energy storage systems in distribution networks using modified Nash bargaining theory

Abstract The emergence of renewable energy technologies in distribution networks and microgrids has raised the importance of integrating energy storage systems into these grids. However, their high investment costs deter decision makers from effectively expanding these assets. In this paper, a cooperative community storage expansion plan is proposed as a bargaining problem between distribution company and private microgrids to jointly invest in energy storage systems. By doing so, each party takes a quota of shared investment costs and thus the burden of high investment costs is alleviated. A modified version of the Nash bargaining theory approach is proposed to implement the cooperative framework in a fair manner. Two cases of non-cooperation and cooperation are distinctively defined and the merits of cooperation are illustrated. The lead acid battery is considered as the storage candidate, for which a novel linearized lifetime model and replacement approach is also proposed. The bargaining results presented on a distribution network test case indicate that through the proposed cooperation, all players receive positive surpluses by decreasing their costs or increasing their revenues. Thus, both distribution company and microgrids would have incentives to participate in the proposed cooperation. Moreover, the superiority of the proposed modified Nash bargaining theory compared to conventional Nash bargaining theory in terms of cooperation fairness is illustrated. Finally, the ability of the proposed cooperative community storage expansion plan to effectively manage cooperative storage installations and replacements is demonstrated.