Decision-Making Models for the Participants in Cloud Energy Storage

Residential and small commercial consumers could use distributed energy storage devices to reduce their electricity bills under variable electricity prices to integrate domestic photovoltaic generation, store excess energy produced, and participate in demand response. However, the high purchase price of these devices still limits their applications. This paper introduces an alternative form of distributed energy storage, cloud energy storage (CES), which is a shared pool of grid-scale energy storage resources that provides storage services to small consumers. The goal of this approach is to lower the cost of energy storage by exploiting the complementarity of consumers as well as economies of scale. This paper considers the investment and operating decisions of both the CES operator and the consumers to demonstrate the benefits of this form of storage. Numerical results based on load and electricity prices of residential consumers from Ireland show that CES can be profitable and that CES can benefit consumers by providing energy storage services at a lower cost.