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This paper presents a comparative evaluation of central and self-dispatchmanagement concepts for battery energy storage (BES) facilities in island powersystems with a high renewable energy source (RES) penetration. BES facilitiesdeployed to support the integration of additional wind capacity can be eithercentrally dispatched by the island System Operator or they can beself-dispatched within a Virtual Power Plant entity comprising renewables andstorage, called a Hybrid Power Station (HPS). To explore the anticipatedbenefits of each BES management paradigm, annual simulations are performed foran example island system, employing a three-layer mixed integer linearprogramming (MILP) method to simulate the unit commitment and economic dispatchprocesses. The levelized cost of energy (LCOE) of combined BES and renewablesinvestments is calculated and the achieved RES penetration levels and islandsystem generation cost are evaluated, allowing the identification of Paretooptimal storage configurations, leading to lowest LCOE for a given RESpenetration target. Overall, the centrally dispatched BES systems prove to besubstantially more cost-effective, compared to the self-dispatched alternative,for achieving similar RES penetration levels.

A comparison between central- and self-dispatch storage management principles in island systems