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The value of storage in electricity distribution: The role of markets

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  • Dirk Lauinger
  • Deepjyoti Deka
  • Sungho Shin

Abstract

Electricity distribution companies deploy battery storage to defer grid upgrades by reducing peak demand. In deregulated jurisdictions, such storage often sits idle because regulatory constraints bar participation in electricity markets. Here, we develop an optimization framework that, to our knowledge, provides the first formal model of market participation constraints within storage investment and operation planning. Applying the framework to a Massachusetts case study, we find that market participation could deliver similar savings as peak demand reduction. Under current conditions, market participation does not increase storage investment, but at very low storage costs, could incentivize deployment beyond local distribution needs. This might run contrary to the separation of distribution from generation in deregulated markets. Our framework can identify investment levels appropriate for local distribution needs.

Suggested Citation

  • Dirk Lauinger & Deepjyoti Deka & Sungho Shin, 2025. "The value of storage in electricity distribution: The role of markets," Papers 2510.12435, arXiv.org, revised Oct 2025.
    • Handle: RePEc:arx:papers:2510.12435
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    File URL: http://arxiv.org/pdf/2510.12435
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