DSO and Aggregator Sharing Concept for Distributed Battery Storage System

Increase in electricity demand, mostly due to integration of new technologies electrifying heat and transport, as well as increasing share of distributed generation, create new challenges for distribution system operator (DSO) in terms of reliability and quality of power supply. This is particularly manifested during daily extremes, suggesting there is insufficient capacity of the distribution grid. To avoid expensive and unnecessary investments in new cables and transformers (since events that require network reinforcement are short and rare), the DSO can define a methodology for implementation of so called non-grid solutions. This paper analyses a concept in which the DSO signs a contract with the aggregator of flexible resources, offering incentives, such as reduced network fee, for using battery storage when necessary. Since the aggregator is looking for a feasible business case due to high investment cost of storage, the incentives given by the DSO provide a cost-effective investment for the aggregator. The aggregator uses battery storage to minimize the cost of purchasing electricity on the market while the DSO is utilizing it to postpone network reinforcement. The problem is cast as a bilevel problem where the operation of the distribution grid is modelled by Second-Order-Cone-Programming (SOCP) relaxation of optimal power flows bidding for the right to use aggregator's battery for preventing violating networks technical constraints. Over a set of scenarios, we demonstrate how coordinated usage of battery storage can postpone network reinforcement while ensuring secure power supply, as well as bring additional cost benefits for the aggregator.