The problem of integrating renewables and storage into a distribution networkis considered under two integration models: (i) a centralized model involving aretail utility that owns the integration as part of its portfolio of energyresources, and (ii) a decentralized model in which each consumer individuallyowns and operates the integration and is capable of selling surplus electricityback to the retailer in a net-metering setting. The two integration models are analyzed using a Stackelberg game in which theutility is the leader in setting the retail price of electricity, and eachconsumer schedules its demand by maximizing individual consumer surplus. Thesolution of the Stackelberg game defines the Pareto front that characterizesfundamental trade-offs between retail profit of the utility and consumersurplus. It is shown that, for both integration models, the centralized integrationuniformly improves retail profit. As the level of integration increases, theproportion of benefits goes to the consumers increases. In contrast, theconsumer-based decentralized integration improves consumer surplus at theexpense of retail profit of the utility. For a profit regulated utility, theconsumer based integration may lead to smaller consumer surplus than that whenno renewable or storage is integrated at either the consumer or the retailerend.
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