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Abstract—Variable demand, dynamic electricity pricing and solar panel. This approach uses a small test panel to measure
intermittent renewable energy are sources of variability and the local availability of solar energy as a function of time and
uncertainty in smart grid systems. Energy storage devices can be the house smart meter readings to track the actual load. These
used to absorb these fluctuations and reduce the overall cost. The
goal is to find the best policy for storing, buying, selling and using measurements are made for some time prior to making the
energy in the presence of this variability and uncertainty. This investment decisions. An algorithm then simulates the system
paper explores a comprehensive methodology to study the effect for different values of policy parameters and sizes of the
of integrating renewable sources and energy storage in reducing battery and panel and evaluates the corresponding operating
the cost of smart grid operation and the sizing and control of and capital costs. The outcome of these measurement-driven
such systems. In this paper, we consider grid-connected dwellings
with a solar panel and battery as an example scenario. Numerical simulations is a choice of policy parameters and size of the
results illustrate the performance of our proposed methodology. battery and solar panel. Note that after the solar activity has
been collected, the measurements can be combined with the
I. I NTRODUCTION smart meter readings of other houses in a similar location to
select their appropriate system.
Uncertainties associated with renewable sources create a
We also analyze how well the PP performs by comparing
challenge for their integration into the grid [1]. Energy storage
them to the solution of a Markov decision problem that
can play an important role by mitigating the variable load,
assumes a genie who reveals hidden state information.
renewable source and electricity prices [2]-[5].
The goal of the proposed policies is to minimize the long-
The analysis of suitable policies for storing, buying, sell-
term average cost while fully meeting the variable demand.
ing and using energy in the presence of many sources of
The cost includes the capital cost of solar panels and batteries,
uncertainty is complex. Our main objective is to develop a
as well as the operating cost of buying energy from the grid.
simple approach that enables the study of various scenarios
for integrating energy storage and renewable energy sources A. Related Work
in smart grid systems.
Researchers have studied approaches for storage manage-
In this paper, we focus on grid-connected houses equipped
ment and control in order to optimize several features in
with a solar panel and a battery. The battery is useful for:
smart grid systems. They have explored using energy storage
• Reducing the variability of the demand from the grid. for minimizing energy imbalance (the differences between
This variability is undesirable for the utility company that demand and local energy). The authors of [7] proposed an
may impose a tariff that penalizes peak demand. approach to reduce reserve energy requirement in power
• Adjusting for the time-of-day variations of the renewable system dispatch. They formulate the power imbalance problem
source and load that are typically out of phase. for each timescale as an infinite horizon stochastic control
• Exploiting time-of-day pricing by buying electricity when problem and show that a greedy policy minimizes the average
it is cheap. magnitude of the residual power imbalance. Their analysis
Classically, energy storage for solar panels is mostly designed applies to the case in which the utility company owns and op-
for stand-alone applications. This means that an amount of erates the storage. They use the prediction for multi time scale
energy must be stored to fill at least the production gap of of renewable generation. The optimal power flow problem with
several cloudy weather days. If the dwelling is connected to energy storage is formulated in [8] assuming deterministic load
the grid, an energy storage system should not necessarily cope with the objective of minimizing the total quadratic generation
with a long period of low solar panel production, as the grid cost. [9] addresses algorithms for minimizing the long-term
is available as a back-up. Hence, the storage and solar panel energy cost in the presence of large storages, using online
sizing criteria are different from autonomous systems. dynamic control approach. They assume that the prices and
First, we develop a methodology for selecting a good demands follow a fixed but unknown distribution. Moreover,
parametric policy (PP) for storing, buying, selling and using they assume there are no renewable sources and the battery
energy and the corresponding optimum size of the battery and used only for the purpose of arbitrage. Similarly, in [10]
528
2015 IEEE International Conference on Smart Grid Communications (SmartGridComm): Architectures, Control and Operation for
Smart Grids and Microgrids
IV. A PPROXIMATION λ(n) = λ1 if electricity is cheap during time slot n and let
One might formate the problem as a Markov decision λ(n) = λ2 otherwise. The policy buys Gn from the grid.
problem with incomplete observations that would then give the Define
optimal control policy Gn . This approach is not satisfactory An = W n + R n S − L n .
for a number of reasons:
Then, if An < 0,
• The optimal policy is complicated and depends on un-
known parameters. Since, the control policy Gn at each Gn = max{λ(n), −An }, Wn+1 = max{0, λ(n) − An }.
time is a function of (Rn , W n , Ln ), solving the DP
equations requires discretizing these distributions, which Also, if An > 0,
results in a very large state space.
• Lack of guidelines and insight. This approach is brute-
Gn = min{λ(n), max{B−An , 0}}, Bn+1 = min{B, An +λ(n)}.
force and provides numerical results with no insight into
For instance, if An > 0, then the renewable energy plus the
how they depend on various aspects of the system.
energy in the battery suffice to serve the load. In that case,
For these various reasons, our goal is to develop a more the battery charge reaches the value max{B, An } without the
insightful and scalable methodology that may suggest practical grid. One then buys max{λ(n), B − max{B, An }} to further
learning mechanisms. recharge the battery. The other cases are similar.
The cost of the system at time n is then
A. Parametric Policies (PP)
In this section, we discuss a measurement-based approach Cn = E(n)Gn + γS + βB
to optimize the design and control of the system. First, we
collect measurement traces for the specific dwelling, or we use recall that E(n) is the unit price of the electricity during time
measurements previously made in the same neighborhood that slot n, γ is the amortized cost of a unit-size solar panel and β
we recalibrate. We describe the former case. One first installs that of unit-size battery per time slot. We assume for simplicity
a small test solar panel on the roof of the house to record that the costs are linear in the size, but that assumption can
a time series of the solar power that such a panel produces. be relaxed easily to conform to actual prices.
In parallel, one uses the smart meter readings to record the For the third scenario, we include the possibility of selling
electrical consumption of the house over time. This monitoring back electricity to the grid. We assume that the selling price
produces two time series: Rn and Ln . is κE(n) during time slot n, where E(n) is the buying price
Given the traces (Rn , Ln ) ∀n ≥ 1, one performs parallel and κ ∈ [0, 1]. If κ = 0, then the optimal policy will not
trace-driven simulations for different solar panel and battery sell electricity. The policy sells electricity if the battery would
sizes and parameters of control policies. These simulations overflow otherwise and also if there is some available energy
track the operating costs of these different systems and allow and if λ(n) < 0. The policy buys G(n) from the grid.
to identify the values that result in the smallest cost. ⎧
⎪
⎪ min{B − An , λ(n)}, if An > B or
To implement this methodology, one must define parametric ⎪
⎪
⎨ 0 < An < B and λ(n) > 0;
control policies. For the first scenario (as described in Section
Gn = max{−An , λ(n)}, if 0 < An < B and
III), the strategy for different values of α, S and B is as ⎪
⎪
⎪
⎪ λ(n) < 0;
follows: we buy electricity at constant rate Gn = α, ∀n ≥ 1 ⎩
−An , if An < 0.
except that we stop buying when the battery is full and we
buy Ln − Rn S when the battery is empty. We assume that the Also,
cost of buying electricity from the grid is a non-linear function Wn+1 = An + Gn
of the amount of energy. These simulations keep track of the
average cost of buying electricity for different values of B and and the cost of operating the system during time slot n is Cn
S. From these simulations, one can determine the best values where
of those parameters. This strategy corresponds to a simple
Cn = En Gn 1{Gn > 0} + κEn Gn 1{Gn < 0}
policy for buying energy from the grid.
+γS + βB.
For the second scenario, the PP is slightly different. Es-
sentially, the policy buys electricity at rate λ1 and λ2 during From the trace-driven simulation, one can then compute an
the night (off-peak) and day (on-peak), respectively. However, average cost per hour C(S, B, λ1 , λ2 ) as follows:
this policy is adjusted to meet the load and not overflow the
N −1
battery. 1
More precisely, the policy is defined as follows. Let Wn be C(S, B, λ1 , λ2 ) = Cn .
N n=0
the charge of the battery at time n and B the capacity of the
battery. Assume that a solar panel of size S would produce Using these results, one can determine the values of
the power Rn S, where Rn is the power that the test (unit- (B, S, λ1 , λ2 ) that minimize the capital and operating costs
size) panel produces. Finally, recall that the load is Ln . Let of the system.
529
2015 IEEE International Conference on Smart Grid Communications (SmartGridComm): Architectures, Control and Operation for
Smart Grids and Microgrids
530
2015 IEEE International Conference on Smart Grid Communications (SmartGridComm): Architectures, Control and Operation for
Smart Grids and Microgrids
a d B∗ ∗
CDP 1
(¢/kWh)
0.3 0.3 8 19.1
0.5 0.6 10 20.2
0.6 0.7 12 22.4
0.6 0.8 12 23.6
B∗ S∗ α∗ C1∗ (cent/kWh)
β=5 8 1 4 26.1
β=7 7 2 3 28.5
β=9 5 2 2 30.4
β = 12 4 2 2 31.7
Fig. 4: Example: Cost (¢/kWh) vs. B when S = 3. β, the battery size decreases and the size of the solar panel is
almost the same. Moreover, α decreases and the average cost
increases as β increases. This is because, the smaller battery
can store a lower value of the constant electricity rate α.
The result for scenario 2 is presented in Table IV. The
decision variables for this problem are λ1 , λ2 , S and B. C2∗
denotes the optimum cost for this scenario. We set κ1 = 20
and evaluate the performance for varying (κ2 −κ1 ). Increasing
(κ2 −κ1 ) leads to larger battery sizes. This is because one may
be able to store more energy during the night when electricity
is comparably cheaper. Similarly, the value for λ1 increases
(and λ2 decreases) as (κ2 − κ1 ) increases.
Figure 7 shows the amount that one can save by having the
opportunity to sell back to the grid. Recall that one may sell
back at the cost κE(n), where E(n) is the rate for buying
Fig. 5: Example: Average total cost (¢/kWh) vs. S and B. electricity at time n. For simplicity, E(n) is κ1 and κ2 for
the electricity price at night and day, respectively. The costs
are defined in Table I. The total cost decreases as κ increases,
if the probability of going to the cloudy state increases (by because the selling back rate increases. Hence, one may use
increasing a and d), the optimum battery size and average larger batteries to store more than the daily load to sell it back
∗ to the grid. Given these parameters of the system, the battery
total cost (CDP 1
) increase. This is because there is a higher
chance for larger battery sizes to store more during the sunny cannot be larger than a certain value.
state and save it for the cloudy state. However, by increasing Figure 8 shows that, as β varies, the costs of the PP are very
a and d, B ∗ may not increase from the certain level, because
there is insufficient renewable energy to fill up the battery.
Hence, one may not gain by using larger battery sizes.
Using the first and second scenarios, the average total costs
∗ ∗
from DP (CDP 1
and CDP 2
) are compared with the no battery
∗ ∗
and no solar panel case (CN O1 and CN O2 ) (in Figure 6).
This shows how much one can earn by using solar panels and
batteries with different costs. The reason for the convergence
of the average total cost is that by increasing β, the battery
size approaches zero. Considering the effect of solar panel,
the costs from DP are always lower than the costs from the
no battery and no solar panel case.
531
2015 IEEE International Conference on Smart Grid Communications (SmartGridComm): Architectures, Control and Operation for
Smart Grids and Microgrids
[3] G. Barbose and C. Goldman, “A survey of utility experience with real time
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ACKNOWLEDGMENT [17] N. Gast, D.-C. Tomozei and J.-Y. Le Boudec. “Optimal Generation and
The authors would like to thank Longbo Huang for suggest- Storage Scheduling in the Presence of Renewable Forecast Uncertainties.”
In IEEE Trans. Smart Grid, vol. 5, num. 3, p. 1328-1339, 2014.
ing the use of weather and demand scenarios for evaluating the [18] PG&E Residential Time of Use Pricing. http://goo.gl/dGVnAf
policies. This research was supported in part by the National [19] W IKIPEDIA Electric Vehicle battery. http://goo.gl/6cPmGN
University of Singapore and by MURI grant BAA 07-036.18. [20] E NERGY I NFORMATIVE How Much Do Solar Panels Cost. http://goo.
gl/B2Fc2K
R EFERENCES [21] U.S. E NERGY I NFORMATION A DMINISTRATION How Much Electricity
Does an American Home Use? http://goo.gl/R7ycMj
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