Abstract/Summary

As a result of market liberalisation, a large number of electricity retailers have emerged in the electricity market. Acting as the intermediaries between the electricity producers and the customers, the electricity retailers aim to balance the supply and demand and shoulder substantial risks generated from both sides. Due to the randomness of the electricity load, it is difficult for electricity retailers to make an accurate electricity purchasing plan in advance to meet customer demand. This deviation leads to a proportion of spot electricity purchases that require a higher purchase cost. As a result, one of the most serious concerns facing electricity retailers is how to improve their balancing abilities and reduce power purchase deviation. In contrast to previous research, which has generally recommended that electricity retailers invest in energy storage systems or develop optimised purchasing strategies, this paper proposes a new strategy for the electricity retailers, which is renting external flexible resources to solve the market uncertainty of the electricity retailers, thereby lowering purchase costs and increasing profits. The proposed business model makes use of the cloud energy storage to solve the supply-demand imbalance issue of electricity retailers. The cost calculation model and decision optimisation model have been established in the process of renting cloud energy storage. Charging and discharging cloud energy storage have been separately rented to deal with different positive and negative load deviations, which can simplify the optimisation model. As an experimental paper, the proposed model has been tested in the PJM power market in the United States and the New South Wales power market in Australia. The findings confirm that renting the cloud energy storage capacities can significantly reduce costs and maximise profits for the electricity retailers when compared to the situation without the cloud energy storage. The biggest saving can reach 24.5% in the PJM market. With the rapid fall of battery prices, the advantage of the proposed strategy will be more obvious.