Encouraging household investors to install distribution level battery storage systems using incentive prices

In this paper a bi-level optimization approach is introduced to increase the participation of household investors to install battery storage systems in the distribution level. The incentive prices are used here to encourage the private investor. In the upper level the viewpoint of the government is modeled in which, the peak shaving is the goal while minimizing the cost due to the allocated subsidies. In the lower level of the model the investors’ point of view is modeled and their profit is maximized. The bi-level model is converted into its equivalent single level optimization using KKT optimality condition. The proposed single level nonlinear model has been linearized using big-M method and the strong duality theorem (SDT). A dynamic iterative model based on grid-search is also implemented to model the behavior of the participants. The performance of the presented model has been analyzed using real data of Yazd network.