Optimal Electricity Storage Sharing Mechanism for Single Peaked Time-of-Use Pricing Scheme

TL;DR

This paper designs an optimal sharing mechanism for electricity storage in multi-tier ToU pricing schemes, ensuring maximal social welfare and addressing arbitrage challenges.

Contribution

It introduces a novel sharing mechanism for complex ToU schemes, providing a unique equilibrium that maximizes social welfare.

Findings

The mechanism achieves maximal social welfare under mild conditions.

It simplifies arbitrage analysis for 3-tier ToU schemes.

A unique equilibrium exists for the proposed sharing mechanism.

Abstract

Sharing economy has disrupted many industries. We foresee that electricity storage systems could be the enabler for sharing economy in electricity sector, though its implementation is a delicate task. Unlike in the 2-tier Time-of-Use (ToU) pricing, where greedy arbitrage policy can achieve the maximal electricity bill savings, most existing ToU schemes consist of multiple tiers, which renders the arbitrage challenging. The difficulty comes from the hedging against multiple tiers and the coupling between the decisions across the day. In this work, we focus on designing the energy sharing mechanism for single peaked ToU scheme. To solve the problem, we identify that it suffices to understand the arbitrage policies for two forms of 3-tier ToU schemes. We submit that under mild conditions, the sharing mechanism yields a unique equilibrium, which supports the maximal social welfare.