Cost-efficient Deployment of Storage Unit in Residential Energy Systems

Abstract

With the mushrooming of distributed renewable generation, energy storage unit (ESU) is becoming increasingly important in residential energy systems. This letter proposes a fractional programming model to determine the optimal power and energy capacities of residential ESUs, aiming at minimizing the ratio between the reduced electricity tariff and the investment cost of ESU, ensuring the minimal payback time. A decomposition algorithm is developed to solve the fractional program based on convex optimization; the subproblem is a dual convex quadratic program which provides cutting planes, and the master problem comes down to a small linear program after variable transformations. Compared to the widely used cost-minimum method, the proposed model is cost-efficient: it enjoys a higher rate of return which is usually welcomed by smaller consumers.