BRIDGING THE GAPS FOR VALUING DISTRIBUTED ENERGY RESOURCES

Abstract

Distributed Energy Resources (DERs) comprise of distributed generation (DG), energy storage (ES) and demand response (DR). DERs are different from other participants because of their distinctive characteristics: they are located on the demand side and they have some flexibility. DERs bring many streams of benefits for different system participants. Various methods have been proposed to capture and quantify the benefits DERs bring and distribute them to DERs. In general, these methods can be put into two categories: avoided-cost based methods and tariff based methods. Both categories have disadvantages: the avoided-cost methods calculate the benefits indirectly which makes it complicated for DERs to be rewarded. The tariff based methods fail to represent some benefits while mispresent some other benefits. The goal of this work is to bridge the gap for valuing distributed energy resources. We first evaluate on the tariff based methods: we study the financial impacts of DERs owned by commercial customers on their load serving entity. The study shows the tariff should be modified in order to fairly represent the true values of DERs. Then we design value of DERs tariffs and conduct many case studies to show these tariffs provide DERs with higher savings at the same time reduce the amount of losses the load serving entity experiences. Secondly, we study the avoided-cost based methods. We propose a battery scheduling algorithm that simultaneously maximize multiple streams benefits calculated by avoided-cost methods. Next, we develop a battery aggregator model that combines the tariff based methods with the avoided-cost based methods. This model incorporates the advantages of both categories and bridges the gap for valuing DERs.