Decentralized Foresighted Energy Purchase and Procurement With Renewable Generation and Energy Storage

We study a power system with one independent system operator (ISO) who procures energy from energy generators, and decentralized aggregators who purchase energy from the ISO to serve their customers. With the penetration of renewable energy generation, the aggregators are adopting energy storage to deal with the high volatility in supply and prices. In the presence of energy storage, it is beneficial for all the entities (i.e. the ISO and aggregators) to make foresighted decisions (i.e. energy procurement decisions by the ISO and energy purchase decisions by the aggregators) to minimize their long-term costs. However, the optimal foresighted decision making is complicated mainly because the information required to make optimal decisions is decentralized among the entities. We propose a design framework in which the ISO provides each aggregator with a conjectured future price, and each aggregator distributively minimizes its own long-term cost based on its conjectured price as well as its local information. The proposed framework can achieve the social optimum despite the decentralized information among the entities. Simulation results demonstrate significant reduction in the total cost by the proposed foresighted energy purchase and procurement (EPP), compared to the optimal myopic EPP (up to 60% reduction), and the foresighted EPP based on the Lyapunov optimization framework (up to 30% reduction).