Projects per year
Abstract
This paper proposes a novel real option (RO)-based network investment assessment method to quantify the flexibility value of battery energy storage systems (BESS) in distribution network planning (DNP). It applied geometric Brownian motion (GBM) to simulate the long-term load growth uncertainty. Compared with commonly used stochastic models (e.g. normal probability model) that assume a constant variance, it reflects the fact that from the point of prediction, uncertainty would increase as time elapses. Hence, it avoids the bias of traditional net present value (NPV) frameworks towards lumpy investments that cannot provide strategic flexibility relative to more flexible alternatives. It is for the first time to adopt the option pricing method to evaluate the flexibility value of distribution network planning strategies. To optimize the planning scheme, this paper compares the static NPVs and flexibility values of different investment strategies. A 33-bus system is used to verify the effectiveness of the formulated model. Results indicate that flexibility values of BESS are of utmost importance to DNP under demand growth uncertainties. It provides an analytical tool to quantify the flexibility of planning measures and evaluate the well-timed investment of BESS, thus supporting network operators to facilitate flexibility services and hedge risks from the negative impact of long-term uncertainty.
Original language | English |
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Pages (from-to) | 2721-2934 |
Number of pages | 14 |
Journal | IET Renewable Power Generation |
Volume | 16 |
Issue number | 13 |
Early online date | 12 Jul 2022 |
DOIs | |
Publication status | Published - 5 Oct 2022 |
Bibliographical note
The author(s) received no specific funding for this work.ASJC Scopus subject areas
- Renewable Energy, Sustainability and the Environment
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Dive into the research topics of 'Real option-based network investment assessment considering energy storage systems under long-term demand uncertainties'. Together they form a unique fingerprint.Projects
- 3 Finished
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Peer-to-Peer Energy Trading and Sharing - 3M (Multi-times, Multi-scales, Multi-qualities)
Li, F. (PI), Jeon, J. (CoI) & Li, R. (CoI)
Engineering and Physical Sciences Research Council
1/09/16 → 29/02/20
Project: Research council
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High Energy and Power Density (HEAPD) Solutions to Large Energy Deficits
Li, F. (PI), Redfern, M. (CoI) & Walker, I. (CoI)
Engineering and Physical Sciences Research Council
30/06/14 → 29/12/17
Project: Research council
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ECONOMICALLY EFFICIENT NETWORK CHARGING METHODOLOGY FOR A SY STEM WITH SIGNIFICANT INTERMITTENT GENERATION - ARF
Li, F. (PI)
Engineering and Physical Sciences Research Council
1/10/06 → 30/09/11
Project: Research council