Distributed Storage Investment in Power Networks

The value created by aggregating behind-the-meter distributed energy storage devices for grid services depends on how much storage is in the system and the power network operation conditions. To understand whether market-driven distributed storage investment will result in a socially desirable outcome, we formulate and analyze a network storage investment game. By explicitly characterizing the set of Nash equilibria (NE) for two examples, we establish that the uniqueness and efficiency of NE depend critically on the power network conditions. Furthermore, we show it is guaranteed that NE support social welfare for general power networks, provided we include two modifications in our model. These modifications suggest potential directions for regulatory interventions.