The Economic Benefits of a Centralized Energy Storage System


The Economic Benefits of a Centralized Energy Storage System

The economic benefits of energy storage for residential consumers and prosumers are significantly higher under centralized coordination than uncoordinated operation. This is because system operators can better balance demand-side flexibility and reduce electricity prices through arbitrage.

The impact of scheduling coordination on annual electricity costs and savings increases with the ratio of variable renewable capacity to flexible supply capacity in the power system. Moreover, centralized coordination maximizes consumer electricity costs savings under Gone Green and Slow Progression scenarios.


The power system is undergoing a significant transformation, with new energy technologies giving consumers and utilities more options for generating, using and managing energy. These changes include energy storage systems that store and release electricity on demand. These systems can be installed in both residential and commercial applications and have several benefits, including reducing peak demand, lowering electricity costs, and providing grid stability and resilience.

Energy storage systems that are operated by a central energy storage operator are called community energy storage systems (CESS). A CESS consists of centralized shared energy storage, where users subscribe to a fixed space of centralized energy storage and pay a service fee to the aggregator.

The economic benefits of CESS can be improved by enabling prosumers to participate in the local energy market and interact with each other. This can incentivize homeowners to install onsite PV and storage, and make the system more resilient and cost effective. This study compares two scenarios, distributed coordination versus centralized coordinated operation, and measures the impact on consumer annual electricity savings. It also examines the impact of adjusting the electricity system load profiles and on the efficiency of a CESS.


Energy storage is one of the most important technologies to help transform our grid, enabling increased use of renewables Centralized Energy Storage System and reducing the need for fossil fuels. It can provide a variety of services, including balancing the grid, providing power reserve and flexibility for ancillary markets, and reducing overall electricity costs by adjusting supply and demand.

Compared to distributed energy storage, which uses many small individual batteries connected in parallel and series with each other, the centralized MMC-ES has lower system cost and control difficulty (Baruschka and Mertens, 2011). However, due to the limited space of the battery modules, this topology cannot support higher voltage profiles.

In this paper, we propose a new centralized local energy storage modular multilevel converter (MMC-CLES) with a scalable number of sub-modules for high voltage profile and large energy efficiency. The MMC-CLES consists of two shared sub-modules on the upper and lower DC bus sides, thereby reducing switching loss and improving energy conversion efficiency. The centralized MMC-CLES topology is also shown to offer significant advantages over the traditional distributed energy storage in terms of power flow analysis and modeling.


Centralized energy storage (CESS) can be implemented as a large utility-scale project to support the local electricity grid or as a small “behind the meter” system in residential microgrids to manage electricity costs and provide backup power. Due to the constraints associated with investment costs and prosumers’ arbitrary energy consumption patterns, CESS has low utilization rates. This paper presents a new design that can improve the utilization rate of CESS by allowing users to rent a portion of its limited capacity.

The benefits offered by centralized coordination versus distributed Centralized Energy Storage System coordination of home EES are assessed under different energy system scenarios and tariff structures. In a typical case, centralized scheduling induces 10% higher savings for solar PV-battery owners. However, the private value of aggregation drops as the number of consumers joins the scheme.

The optimal configuration model for centralized shared energy storage in microgrids is proposed using bi-level optimization. The response characteristics of the storage and controllable load in the resilience microgrid are analyzed to jointly meet the regulatory demand for multi-scenarios. Then, a centralized energy storage operation mode that maximizes net income for the storage and reduces payment cost of load in the microgrid is designed.


Centralized energy storage systems can be installed as large utility-scale projects to help manage peak power demand and stabilize the grid, or as small systems sited at a residential or commercial location to lower electricity costs and provide backup power. They can be used to manage electricity consumption and reduce peak demand, or to support renewable energy generation, helping to increase reliability and lower energy costs.

Residential microgrids are one of the key research topics in Smart Grid. They are composed of PV, controllable load, distributed and centralized storage. Residential consumers/prosumers are able to participate in the local energy market and interact with each other via CESS. This architecture enables shiftable load scheduling, reduction of electricity per unit price and increment in the utilization of distributed energy storage.

It is found that the centralized coordination of home batteries offers benefits 10% higher than the distributed operation. It is also shown that the benefits of aggregation can be redistributed to incentivize prosumers who have PV-batteries and consumers without onsite energy technologies to join the coordination scheme.

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