Centralized vs. distributed energy storage – Benefits for residential users

Abstract Distributed energy storage is a solution for increasing self-consumption of variable renewable energy such as solar and wind energy at the end user site. Small-scale energy storage systems can be centrally coordinated by "aggregation" to offer different services to the grid, such as operational flexibility and peak shaving. This paper shows how centralized coordination vs. distributed operation of residential electricity storage (home batteries) could affect the savings of owners. A hybrid method is applied to model the operation of solar photovoltaic (PV) and battery energy storage for a typical UK householder, linked with a whole-system power system model to account for long-term energy transitions. Based on results, electricity consumers can accumulate greater savings under centralized coordination by between 4 and 8% when operating no technology, by 3-11% with electricity storage alone, by 2-5% with stand-alone solar PV, while 0-2% with PV-battery combined. Centralized coordination of home batteries offers more optimized electricity prices in the system, and as such, higher private savings to all consumers. However, consumers without onsite energy technologies benefit more than PV-battery owners. Therefore, based on system-level benefits of aggregation, the regulator should incentivize prosumers with PV-battery, who are able to balance their electricity supply-demand even without central coordination, to let their storage be controlled centrally. Possible revenues of storage owners from ancillary services as well as the cost of aggregation (e.g., transaction fees charged by aggregators) are not considered in this analysis.