Wholesale Market Participation of Storage with State-of-Charge Dependent Bids

TL;DR

This paper introduces a convexification method for storage bids with state-of-charge dependence in wholesale markets, enabling linear programming solutions and supporting market participant rationality, leading to higher profit margins.

Contribution

It proposes the EDCR condition to convexify SoC-dependent storage bids, ensuring market rationality and improving profit margins in multi-interval economic dispatch.

Findings

Convexification of SoC-dependent bids under EDCR condition.

Support for market participant rationality in day-ahead and real-time markets.

Numerical demonstration of increased profit margins with SoC-dependent bids.

Abstract

Wholesale market participation of storage with state-of-charge (SoC) dependent bids results in a non-convex cost in a multi-interval economic dispatch, which requires a mixed-integer linear program in the market clearing. We show that the economic dispatch can be convexified to the standard linear program when the SoC-dependent bid satisfies the equal decremental-cost ratio (EDCR) condition. Such EDCR bids are shown to support individual rationalities of all market participants in both the day-ahead multi-interval economic dispatch under locational marginal pricing and the rolling-window look-ahead dispatch under temporal-locational marginal pricing in the real-time market. A numerical example is presented to demonstrate a higher profit margin with an SoC-dependent bid over that from an SoC-independent bid.