Investment-Return-Stability-Oriented Time-of-Use Pricing Design for Distributed Energy Storage in Microgrids

Abstract

Distributed energy storage (DES) can support peak shaving and renewable energy integration in microgrids, yet private investment is constrained by high upfront cost and uncertain returns. This paper proposes an investor-oriented time-of-use (ToU) pricing framework considering investment return stability. A bilevel Stackelberg game is formulated between the distribution system operator and storage investors, and a critical-threshold-search method is developed to solve the resulting non-smooth pricing problem. A throughput-based battery degradation cost model is also incorporated. Numerical results show that the proposed strategy induces a moderate storage capacity of about 125 kWh, achieves about 1.3×104 USD cumulative cash flow at year 10, and maintains an intermediate ROI level of about 520%, thereby providing a more balanced trade-off among peak shaving, investment inducement, and return robustness than conventional ToU schemes. The proposed framework is relevant to microgrid tariff design and distributed storage planning.