Co-Optimization of Battery Storage Investment and Grid Expansion in Integrated Energy Systems

Battery storage is a flexible resource that can deliver a wide range of grid services quickly and efficiently. This article presents an investment planning model for battery storage, power transmission grid, and natural gas network in a stochastic gas–electric energy infrastructure. A bilevel stochastic optimization program is developed with an upper level investor and two interrelated lower level players. The investment decisions pertaining to the battery storage facilities and the expansion of power and gas systems are made by an independent investor anticipating the clearing results of gas and electricity markets, modeled as connected mixed-integer lower level programs. The nonconvexity of power generation and the randomness of power and gas demands, as well as renewable energy are considered in the formulation of the lower level problems. To compute this stochastic bilevel optimization with discrete decisions in both levels and interrelated lower level programs, we develop an exact solution methodology in a decomposed master-subproblem form. The application of the method is illustrated on two test systems. Experimental results show the modeling of gas and power grids’ interaction and the nonconvex nature of power production using the proposed methodology significantly affects the optimal costs and expansion plans.