An increasing penetration of distributed energy resources and electrification-driven peak demand pose significant challenges to distribution networks, often resulting in voltage violations and congestion. This paper presents a multi-stage optimization framework that enables battery storage unit (BSU) to act as a flexible non-wire alternative to traditional grid expansions conducted by Distribution System Operators (DSO), but also helpful for Transmission System Operators (TSO). The proposed method integrates a mixed-integer planning model with a quadratically constrained, second-order-cone–relaxed, AC optimal power flow to determine the optimal siting and sizing of battery storage. Representative operating days are obtained through clustering, while the operational optimization model evaluates battery participation in energy and reserve markets under network constraints. The value of flexibility the DSO procures from an independently-owned battery storage unit is determined as the opportunity cost of providing this flexibility as opposed to taking part in the fast reserves and day-ahead energy markets. The results obtained offer valuable information when weighing the decision between network expansion and alternative strategies and determine the price of flexibility that the DSO can offer to an independently owned storage unit. The results confirm that battery storage can defer network investments while providing transparent and economically justified flexibility remuneration. The proposed framework is implemented sequentially, with strong coupling between planning and operational stages through physical constraints and economic signals.
Badanjak et al. (Tue,) studied this question.