Strategic Storage Operation in Wholesale Electricity Markets: A Networked Cournot Game Analysis

Abstract

To investigate the impact of the strategic operation of grid-level energy storage systems on wholesale electricity markets, we study a Cournot competition model where each merchant storage owner seeks to maximize its own profit and the social planner makes the centralized economic dispatch decisions to maximize the social welfare. We establish the existence and uniqueness of the resulting (Cournot) equilibrium, and construct a convex optimization problem that yields the unique Cournot equilibrium. We show that the social welfare achieved at the equilibrium is always no less than that achieved in a market without energy storage. We further show that the social welfare achieved at the equilibrium converges to the maximum social welfare, as the number of symmetric (profit-maximizing) storage owners increases to infinity. Numerical experiments are conducted on the IEEE RTS-24 bus test system to validate established results.