Centralized vs. distributed energy storage – Benefits for residential users

Distributed energy storage is a solution for balancing variable renewable energy such as solar photovoltaic (PV). Small-scale energy storage systems can be centrally coordinated to offer different services to the grid, such as balancing and peak shaving. This paper shows how centralized and distributed coordination of residential electricity storage could affect the savings of owners of battery energy storage and solar PV. A hybrid method is applied to model the operation of solar PV-storage for a typical UK householder, linked with a whole-system power system model to account for long-term energy transitions. Based on results, electricity consumers can cut electricity bills by 28-44% using storage alone, 45-56% with stand-alone solar PV, while 82-88% with PV-battery combined. Centralized coordination of home batteries offers 10% higher benefits compared to distributed operation. Under centralized coordination, consumers without onsite energy technologies benefit almost double compared to PV-battery owners, because peak electricity prices decline in the system for all consumers. Therefore, the economic benefits of aggregation may be redistributed to incentivize prosumers with PV-battery to join such schemes, who can balance their electricity demand even without coordination. The private value of distributed energy storage declines as more storage owners join the coordination scheme