# Market-Driven Energy Storage Planning for Microgrids with Renewable Energy Systems Using Stochastic Programming

## TL;DR

This paper presents a stochastic programming approach for optimally sizing battery energy storage systems in microgrids with renewables, balancing costs and revenues for economic efficiency.

## Contribution

It introduces a convex optimization framework that globally optimizes BESS size considering market prices, renewable variability, and demand forecasts.

## Key findings

- Optimal BESS sizing reduces costs and enhances revenue.
- The approach effectively captures market dynamics and renewable variability.
- Case studies demonstrate practical applicability and insights.

## Abstract

Battery Energy Storage Systems (BESS) can mitigate effects of intermittent energy production from renewable energy sources and play a critical role in peak shaving and demand charge management. To optimally size the BESS from an economic perspective, the trade-off between BESS investment costs, lifetime, and revenue from utility bill savings along with microgrid ancillary services must be taken into account. The optimal size of a BESS is solved via a stochastic optimization problem considering wholesale market pricing. A stochastic model is used to schedule arbitrage services for energy storage based on the forecasted energy market pricing while accounting for BESS cost trends, the variability of renewable energy resources, and demand prediction. The uniqueness of the approach proposed in this paper lies in the convex optimization programming framework that computes a globally optimal solution to the financial trade-off solution. The approach is illustrated by application to various realistic case studies based on pricing and demand data from the California Independent System Operator (CAISO). The case study results give insight in optimal BESS sizing from a cost perspective, based on both yearly scheduling and daily BESS operation.