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A Double-Signal Retail Pricing Scheme for Acquiring Operational Flexibility from Batteries

November 16, 2021

Authors: Mengmeng Cai, Rui Yang, Xiangyu Zhang, Yingchen Zhang and Saifur Rahman

Journal: IEEE Trans on Sustainable Energy, Vol. 13, No. 2, April 2022,
September 2021 


Abstract: Batteries can provide valuable operational flexibility to facilitate the system efficiency. However, there lacks market environments to effectively harness and monetize the value of these assets. Most existing works apply a profit-oriented single-signal pricing scheme, which mixes the value of energy and flexibility together and may ultimately raise the electricity bills. Therefore, this paper proposes a profit-neutral double-signal retail pricing scheme that distinguishes elastic market players (i.e., batteries) from inelastic market players (i.e., inflexible loads) and quantifies the value of energy and flexibility separately. Experimental results indicate that under the incentive provided by the proposed retail pricing scheme: 1) The system efficiency benefit aligns with benefits to both batteries and inflexible loads; 2) Value of operational flexibility, contributing to improve the energy efficiency, can be transparently priced and fairly allocated among batteries; and 3) The dominant role in which inflexible loads play on determining the market price is avoided.