Nonlinear Energy Arbitrage Models and Algorithms for Battery Energy Storage Systems in Electricity Market

Battery energy storage systems (BESSs) are gaining attention due to reduced costs and high flexibility, but developing accurate models for operation presents challenges. This paper introduces a model for the charging and discharging processes via a single current decision variable, approximates the relation between the open circuit voltage and the state of charge with linear functions, and presents an optimization model with bilinear constraints for identifying optimal BESS operational strategies. A transformation technique is introduced to manage the bilinear constraints, transforming the model into an exponential optimization problem with linear constraints. A new sequential linear and quadratic programming approach is developed, with proven convergence. Preliminary experiments demonstrate the efficacy and efficiency of this approach.