In summary, the virtual price of energy storage use is set as E p s t − j = E p m + 0.01. To ensure that prosumers first sell electricity in the LEM before storing and then sending the excess to the grid, we set the virtual price of energy storage slightly lower than the feed-in tariff given by E p j − s t = E p s − g − 0.01.
Because the price clearing process is treated as an exogenous variable in this market, a linear programming (LP) approach is adopted to solve for the optimal solution. Results from the analysis show that peak-valley tariffs increase cost-savings for prosumers and consumers at the expense of grid revenue.
Although wider peak-valley spread promotes cost-savings for LEM participants, the effects on peak-shaving of the power grid is marginal. This is because the peak-valley mechanism is still insufficient to identify all potential spikes in power supply, so the storage and reserve capacity resources cannot reach the efficient allocation.
As will be discussed shortly, under TOU tariff policy, when the grid price is low, the prosumers will choose to purchase electricity from the grid rather than using energy storage to release electricity. In summary, the virtual price of energy storage use is set as E p s t − j = E p m + 0.01.
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