  Energy storage can play an important role in energy management of end users.
To promote an efficient utilization of energy storage, we develop a novel
business model to enable virtual storage sharing among a group of users.
Specifically, a storage aggregator invests and operates the central physical
storage unit, by virtualizing it into separable virtual capacities and selling
to users. Each user purchases the virtual capacity, and utilize it to reduce
the energy cost. We formulate the interaction between the aggregator and users
as a two-stage optimization problem. In Stage 1, over the investment horizon,
the aggregator determines the investment and pricing decisions. In Stage 2, in
each operational horizon, each user decides the virtual capacity to purchase
together with the operation of the virtual storage. We characterize a stepwise
form of the optimal solution of Stage-2 Problem and a piecewise linear
structure of the optimal profit of Stage-1 Problem, both with respect to the
virtual capacity price. Based on the solution structure, we design an algorithm
to attain the optimal solution of the two-stage problem. In our simulation
results, the proposed storage virtualization model can reduce the physical
energy storage investment of the aggregator by 54.3% and reduce the users'
total costs by 34.7%, compared to the case where users acquire their own
physical storage.
