Home // ENERGY 2011, The First International Conference on Smart Grids, Green Communications and IT Energy-aware Technologies // View article

Optimal Control of Residential Energy Storage Under Price Fluctuations

Authors:
Peter Van de Ven
Nidhi Hegde
Laurent Massoulie
Theodoros Salonidis

Keywords: Battery storage, dynamic pricing, dynamic programming, energy storage, threshold policy

Abstract:
An increasing number of retail energy markets exhibit price fluctuations and provide home users the opportunity to buy energy at lower than average prices. However, such cost savings are hard to realize in practice because they require human users to observe the price fluctuations and shift their electricity demand to low price periods. We propose to temporarily store energy of low price periods in a home battery and use it later to satisfy user demand when energy prices are high. This enables home users to save on their electricity bill by exploiting price variability without changing their consumption habits. We formulate the problem of minimizing the cost of energy storage purchases subject to both user demands and prices as a Markov Decision Process and show that the optimal policy has a threshold structure. We also use a numerical example to show that this policy can lead to significant cost savings, and we offer various directions for future research.

Pages: 159 to 162

Copyright: Copyright (c) IARIA, 2011

Publication date: May 22, 2011

Published in: conference

ISSN: 2308-412X

ISBN: 978-1-61208-136-6

Location: Venice/Mestre, Italy

Dates: from May 22, 2011 to May 27, 2011