Economic Value of Energy Storages in Unit Commitment With Renewables and Its Implication on Storage Sizing

Energy storage unit (ESU) is playing an increasingly important role in load shifting and uncertainty mitigation. This paper aims to quantify the value of ESU in the unit commitment (UC) with renewable generation. By treating the power and energy capacities of ESU as continuous parameters, the stochastic UC problem is cast as a multi-parametric mixed-integer linear program (mp-MILP), whose optimal value function (OVF) gives the relation between storage capacity and the daily UC cost in an analytical manner. It encompasses abundant sensitivity information, and its surface can be easily visualized. The reduced cost compared with the benchmark case without storage can be regarded as the value of ESU. As a potential application, the OVF is used to formulated an optimal storage sizing problem that maximizes the ratio between the reduced operation cost and the investment cost, ensuring the minimum time of cost recovery. The solution consists of two steps: the first step constructs the OVF parameterized in storage capacity; the second step reformulates the fractional storage sizing program into an MILP, leveraging the expression of the OVF and variable transformations. Case studies conducted on the IEEE 9-bus system and IEEE 118-bus system illustrate how the OVF offers useful reference for power system operation and planning. The proposed optimal sizing model shows advantages in efficient utilization of investment in terms of payback time and rate of return.