Cooperation and Competition among Energy Storages

TL;DR

This paper analyzes how energy storage units can cooperate or compete, proposing decentralized and centralized methods to ensure storages achieve maximum profits despite competitive pressures.

Contribution

It introduces two novel approaches—artificial cost functions and profit sharing via bargaining—to enable storages to attain non-zero, optimal profits.

Findings

Profit of storages approaches zero under Nash competition as number increases

Decentralized artificial cost functions incentivize cooperative behavior

Centralized profit sharing maximizes storage profits

Abstract

We study competition and cooperation among a group of storage units. We show that as the number of storages increases, the profit of storages approaches zero under Nash competition. We propose two ways in which storages can achieve non-zero profit and show that they are optimal in the sense that storages achieve the maximum possible profit. The first is a decentralized approach in which storages are exposed to artificial cost functions that incentivize them to behavior as a coalition. No private information needs to be exchanged between the storages to calculate the artificial function. The second is a centralized approach in which an aggregator coordinates and splits profits with storages in order to achieve maximum profit. We use Nash's axiomatic bargaining problem to model and predict the profit split between aggregator and storages.