Strategic Biddings of a Consumer demand in both DA and Balancing Markets in Response to Renewable Energy Integration

• Published in: Electric power systems research 2022-09, Vol.210, p.108132, Article 108132
• Main Authors: Tavakkoli, Mehdi, Fattaheian-Dehkordi, Sajjad, Pourakbari-Kasmaei, Mahdi, Liski, Matti, Lehtonen, Matti
• Format: Article
• Language: English
• Subjects: Bilevel programming; electricity market; mathematical program with equilibrium constraints (MPEC); renewable energy generation; strategic bidding
• ISSN: 0378-7796
• DOI: 10.1016/j.epsr.2022.108132

•Developing a two-stage bi-level stochastic optimization model that derives the optimal bidding strategy for a strategic consumer in both the day-ahead and balancing markets under uncertainty of RERs.•Evaluating the actual market power of the strategic consumers by conducting the simulation for 24 hours of a whole day, from 1:00 a.m. to 24:00 p.m., which enables load-shifting for the strategic consumers.•Adopting an exact linearization method to transform the resulted nonlinear mathematical program with equilibrium constraints (MPEC) problem into a mixed-integer linear programming (MILP) problem. This is performed by applying the strong duality theorem and replacing the bilinears term with the equivalent linear terms obtained from complementarity conditions, see Section III-D.•Revealing the impact of strategic and competitive behavior of the consumer in the electricity market by implementing the proposed model on the IEEE RTS 24-Bus system and IEEE RTS 118-Bus system, and providing detailed discussion on the results. This shows the applicability of the proposed method. This paper proposes strategic biddings for a consumer demand that participates in both the day-ahead and balancing markets. The strategic behavior of the consumer is represented by the bilevel optimization programming with minimization of consumer costs at the upper level (UL) subject to the co-optimization of energy and reserve in the market clearing process at the lower level problem (LL). Using the Karush-Kuhn-Tucker (KKT) optimality constraints to replace the LL problem, the bilevel model is recast into a single-level mathematical program with equilibrium constraints (MPEC). The resulted model is finally formulated as a mixed-integer linear programming (MILP) problem using the exact linearization technique and Fortuny-Amat transformation to replace bilinear terms and the complementarity constraints, respectively. The results demonstrate a reduction in the electricity consumption payment for the strategic consumer and a decline in social welfare. © 2017 Elsevier Inc. All rights reserved.