Optimal battery pricing and energy management for microgrids

This paper develops an optimal dispatch strategy for a microgrid's resources through battery pricing. A microgrid fulfills local demand using local generation (conventional and renewable) and storage, along with the electric grid (macrogrid). Demand and renewables such as Photovoltaic (PV) generation are uncertain throughout the day. Optimal management of the resources in a microgrid is necessary to integrate the uncertain renewable energy, serve the uncertain demand and provide the highest returns in terms of cost or emissions. The approach developed in this paper requires minimal modeling effort with regards to uncertainties and emphasizes battery pricing using realized profiles of demand and PV generation. We show that the optimal decision at each time instant is an economic dispatch that takes a rigorously-defined shadow-price for the battery power as input. Furthermore, we show that the calculation of this shadow-price can be simplified to avoid state-constraints in the computation of the optimal control solution. Finally, the results highlight the practical utility of this approach and the developed quasi-optimal solution is comparable to the deterministic optimum cost.