Real-Time Bidding Strategy of Energy Storage in an Energy Market with Carbon Emission Allocation Based on Aumann-Shapley Prices

TL;DR

This paper proposes a novel electricity market with carbon emission allocation using Aumann-Shapley prices and develops a real-time bidding strategy for energy storage to enhance decarbonization efforts.

Contribution

It introduces a new market mechanism with emission-based pricing and derives an optimal bidding strategy for energy storage using Lyapunov optimization.

Findings

The proposed emission allocation method is accurate and efficient.

The real-time bidding strategy improves energy storage utilization.

Numerical experiments demonstrate the method's effectiveness and scalability.

Abstract

Energy storage (ES) can help decarbonize power systems by transferring green renewable energy across time. How to unlock the potential of ES in cutting carbon emissions by appropriate market incentives has become a crucial, albeit challenging, problem. This paper fills the research gap by proposing a novel electricity market with carbon emission allocation and then investigating the real-time bidding strategy of ES in the proposed market. First, a carbon emission allocation mechanism based on Aumann-Shapley prices is developed and integrated into the electricity market clearing process to give combined electricity and emission prices. A parametric linear programming-based algorithm is proposed to calculate the carbon emission allocation more accurately and efficiently. Second, the real-time bidding strategy of ES in the proposed market is studied. To be specific, we derive the real-time optimal ES operation strategy as a function of the combined electricity and emission price using Lyapunov optimization. Based on this, the real-time bidding cost curve and bounds of ES in the proposed market can be deduced. Numerical experiments show the effectiveness and scalability of the proposed method. Its advantages over the existing methods are also demonstrated by comparisons.