Optimal utilization of storage systems under real-time pricing

Abstract

This paper considers the problem of optimal battery usage under real-time pricing scenarios. The problem is formulated as a finite-horizon optimization problem, and solved via an incremental algorithm that is provably optimal in the long run. The proposed approach gives rise to a class of algorithms that utilize the battery state-of-charge to make usage decisions in real-time. The proposed algorithm is simple to implement, easy to modify for a variety use cases, and outperform the state-of-the-art technique such as Markov Decision Process (MDP) based. The robustness and flexibility of the proposed algorithm is tested extensively via numerical studies.