An interactive cooperation model for neighboring virtual power plants

Morteza Shabanzadeh, Mohammad-Kazem Sheikh-El-Eslami and Mahmoud-Reza Haghifam

Applied Energy, 2017, vol. 200, issue C, 273-289

Abstract: Future distribution systems will accommodate an increasing share of distributed energy resources (DERs). Facing with this new reality, virtual power plants (VPPs) play a key role to aggregate DERs with the aim of facilitating their involvement in wholesale electricity markets. In this paper, the trading strategies of a VPP in cooperation with its neighboring VPPs are addressed. Toward this aim, a portfolio of inter-regional contracts is considered to model this cooperation and maximize the energy trade opportunities of the VPP within a medium-term horizon. To hedge against profit variability caused by market price uncertainties, two efficient risk management approaches are also implemented in the VPP decision-making problem based on the concepts of conditional value at risk (CVaR) and second-order stochastic dominance constraints (SSD). The resulting models are formulated as mixed-integer linear programming (MILP) problems that can be solved using off-the-shelf software packages. The efficiency of the proposed risk-hedging models is analyzed through a detailed case study, and thereby relevant conclusions are drawn.

Keywords: Virtual power plant; Inter-regional cooperation; Inadvertent interchange; Arbitrage; Risk-hedging strategies; Second-order stochastic dominance constraints (search for similar items in EconPapers)
Date: 2017
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Citations: View citations in EconPapers (23)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:appene:v:200:y:2017:i:c:p:273-289

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DOI: 10.1016/j.apenergy.2017.05.066

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